Grading Obama Mortgage Relief HAMP
Monday, May 17th, 2010In addition to mortgage reform, the Obama administration plans to roll out its new loan modification program for the unemployed on July 1st 20101. Eligible homeowners could enter a forbearance program rather than a HAMP loan modification. The forbearance could suspend their monthly home loan payments entirely or reduces them to less than 31% of their pre-tax household income. Obama admin officials also plan to provide more details on the performance of the eight largest servicers in July. It will report the average time homeowners spend in the trial phase, the servicers’ handling of calls and problems and a review of whether borrowers were appropriately evaluated. This is another step in the government’s effort to put pressure on servicers to perform. The trial loan modification HAMP have clearly not been working for the “average Joe.”
The traditional mortgage refinancing option has become almost impossible for the average homeowner to qualify for because the lending criteria and FHA guidelines have tightened so significantly over the last two years. Most borrowers are unable to qualify to refinance because of home equity loss, so the HAMP modification program has become an important alternative to homeowners facing foreclosure.
