More HAMP Shenanigans and Those Big Bad Homeowners are Screwing Up Again...
Some 650,000 borrowers are participating in the trial phase of the Obama administration's Home Affordable Modification Program, a $75 billion taxpayer-financed program launched this year.
Most home loan modifications result in lower monthly payments, although some lead to reduced principal on mortgages.
Trial modifications were initially for three months, but the Treasury added 60 days, effectively making them last five months.
Homeowners must submit more detailed documentation before they can have their loan modifications made permanent.
A Treasury Department survey of large mortgage servicers found "over 73 percent of borrowers are current in their trial plan payments," Assistant Treasury Secretary Herbert Allison told a congressional oversight panel.
That leaves about 27 percent who are delinquent on the payments.
Allison provided written answers to questions raised at an October hearing before the Congressional Oversight Panel, which monitors the government's foreclosure prevention plan and other financial rescue efforts.
Allison said that "while not all eligible borrowers will convert to permanent modifications, it is too early to estimate a failure rate, diagnose causes and predict future success rates."
Meanwhile, the Treasury is still trying to "encourage" more modifications, and I'm sure this new plan will work out just like the last 1500 harebrained Treasury schemes.
The Treasury Department summoned Bank of America Corp., Citigroup Inc. and other mortgage servicers to Washington today to accelerate U.S. foreclosure prevention efforts ahead of a yearend deadline for some loan modifications.
The banks, which also include Wells Fargo & Co., JPMorgan Chase & Co. and Morgan Stanley, face a Dec. 31 deadline to make permanent the trial refinancings and concessions they extended this year to about 375,000 homeowners at risk of default. An eligible borrower who doesn’t turn in all their paperwork by yearend “jeopardizes their chance to get a permanent modification,” said Meg Reilly, a Treasury spokeswoman.
While Reilly said no one will be eliminated from the Home Affordable Modification Program, or HAMP, without a “a thorough review,” the Obama administration has so far failed to come close to the 4 million homeowners it set out to help. Banks have blamed the shortcomings on borrowers failing to turn in all their paperwork and confusion about eligibility standards.
“We, like all the other firms, are surprised that we still have documents outstanding,” said Jack Schakett, a credit loss mitigation strategist at Charlotte, North Carolina-based Bank of America, the largest U.S. mortgage lender. “We’re not going to really know the success of the program until we get a clear picture of what is missing,” Schakett said in an interview.
Banks are rushing to meet a new Treasury deadline, announced Nov. 30, to permanently convert more than half of the 650,994 loans that were in trial modification plans at the end of October into permanent reductions by year’s end, he said.
Surely I do not have to remind dear reader here that ZERO trial modifications have actually resulted in permanent loan mods - so Timmy can stop patting JP Morgan on the head for a job well-done already, we get it...