Mortgage Modification Mania

President Obama's chief attempt to quell the housing crisis, HAMP, has been woefully ineffective.  The program began as an attempt to modify 3 to 4 million homeowners, but nearly two years after the program began, it is estimated that only about half a million homeowners continue to make successful HAMP mortgage payments. 

While I applaud the attempt by President Obama to help homeowners modify their loans, the truth is that HAMP has been the definition of failure and has had many unintended consequences along the way. 

I think the biggest problem has clearly been the consequences facing those who entered the program but were either kicked out or stopped making the trial payments.  For many of these homeowners, they saw HAMP as a way to stay in their home.  They expected a reduction in their principal or a lowering of their interest rate.  They expected explicit, clearly defined costs and more affordable monthly payments.

However, the more we learn about HAMP, the more we are finding that these promises were far from reality.  Many homeowners have actually seen their payments increase after their modification.  If they could afford their monthly payments before, how could they possibly make even HIGHER payments?  Others have entered HAMP, qualified and made trial payments, and were promptly kicked out of the program.

With HAMP struggling to help homeowners, we've also seen a steep rise in the amount of private mortgage modifications available.  These are facilitated by the banks alone (WF, Bank of America, Citi), with no government backing or assistance.  In many instances, these private modifications have been even worse than HAMP.  In a particularly egregious example that I recently heard, a homeowner about to face foreclosure was told by their bank that they should simply miss a mortgage payment, allowing them to qualify for the bank's private modification program.  The homeowner followed the bank's instructions and awaited the modification paperwork in the mail.  However, the next week, foreclosure paperwork showed up instead.

At the end of the day, it is easy to get sucked into the hype and hope of the modification plans.  Outwardly they seem designed to help homeowners, perhaps one of the few cases where the government might actually be trying to help homeowners rather than banks.  But two years later, I think we can pretty safely throw cold water over this one.

This is where I come in.  My team specializes in short selling houses.  A short sale is not the perfect solution.  It is not a white knight that will save every homeowner from the aches that ail them.  But a short sale is a process with a defined outcome and clear objectives.  Short sales are done by real estate agents with a presence in the local community.  The goal is to get the homeowner out of the house with their credit intact, their heads held high, and in some cases, with some money in their pockets.

If you or someone you know is having a tough time making mortgage payments, please contact us.  We have the experience, skills, and resources to negotiate with your bank and help you move on.  The day that you stop worrying about your mortgage is the day you can start over fresh.