Home Loan Analysts See HAMP Not Halting St Louis Home Loan Foreclosures
With the large amount of reported failures of the federal program known as HAMP, inside senior officials seem to be jumping on the band wagon showing their new found pessimistic ideas on where this plan may be headed.
There were memos recently exchanged among one main senator and Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), on the subject of HAMP with Barofsky saying that over one-and-a-half million or so mortgage owners would get any type of mortgage aid.
But the pressing headlines is that nearly 4 million Americans including St Louis home loan owners that actually must have this federal assistance. Yet, most professionals are despondent at the reality of this number being accomplished.
The reason for this dismal outlook is that less than 200000 or five percent have actually moved forward from the trial plan into a permanent modification status.
But if matters couldn't be worse, the inspector general's report warned that many borrowers are at danger of re-defaulting on their St Louis mortgage loans even after acquiring help under the federal plan.
Again the critics are coming out of the wood works suggesting that these consumers are irresponsible. But the truth of the matter is, many still owe more money than what their house is worth not mentioning that others have second mortgages.
Without veering off to a great degree, I think its fair to mention the abominable acts of not just the big insurance and banking leviathans but the average person who bought a home they knew they just were not able to afford and did it by taking the only type of loan that could deed them this undeserved asset. Then you have the pure fraudulent actions of those who knowingly lied on their stated income application. Two years later, these acts have come to be known as "liar loans."
Getting back to the facts, Barofsky then displays his further skepticism basically saying that these loan modifications may not be the best program to continue offering. The Treasury department had other opinions as to the wide spread criticism.
In a long, drawn out reply included in the brief, Herbert Allison, assistant Treasury secretary for financial stability said the plan "should be measured by how many eligible consumers are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either staying in their homes or transitioning with dignity to more suitable housing. The amount of permanent modifications is one element, but not the only element of gauging the success."
Whether this federal program meets its ultimate success or failure is second only to the fact that these key officials want us to view their fundamental beliefs from their viewpoint and no other.
Allison seems to want everyone to grasp that the important reason is not the failing of HAMP, but that Barofsky is simply not gauging its lack of success in the correct manner.
Since Allison clearly points out that permanent modifications are really only one way to help suffering homeowners, this somehow implies that he himself doesn't firmly believe his previous comment.
We cannot ignore the fact that these services are also offering other foreclosure prevention initiatives such as short sales as realistic alternatives. It is sad that many of these consumers both nationally and locally can no longer measure up financially for any type of St Louis refinancing options.
Yet, most people who have been following this plan from its inception were spoon fed the amazing concept that permanent loan modifications through HAMP was the best and perhaps the only way the country would see this overwhelming amount of foreclosures go away.
And as we are finding out, a lot of these modifications did not include a realistic principal reduction, which means in all likelihood, they will continue to fail.
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