Louisville Kentucky HAMP Mortgage Modifications
These figures on HAMP are from the Congressional Oversight Panel report and websites which outline problems with mortgage modifications. Many homeowners try HAMP instead of Chapter 13 bankruptcy to cure defaulted mortgages. The Hamp Mortgage Modification, FDIC Foreclosure Modification program and 2010 hamp guidelines are here. HAMP can be done during bankruptcy and homeowners in foreclosure need to make a choice to either:
1. save the home by filing a Chapter 13 to catch up the mortgage arrears or
2. Defend foreclosures to time to find another home and explore alternatives.
HAMP mortgage modifications normally fail. Not filing a Chapter 13 early, increases monthly payments in Chapter 13 sometimes making Chapter 13 unaffordable and insuring home loss. Loan servicers (collectors) make fees from servicing mortgage company loans. It is not in the best interest of servicers for mortgages to be current. The longer you are in default the more fees money mortgage servicers, mortgage companies and foreclosure attorneys charge.
In 2010 4% of homeowners were served with foreclosure. 250,000 foreclosures were started each month but only 100,000 went to sale. 150,000 were allowed to slip further into default, increasing mortgage arrearages, collection and attorney fees charged and paid back. Fees guaranteed by mortgage insurance. hamp guideline
HAMP will stop less than 10% of foreclosures because banks and servicers don’t make deals that don’t make profits. The facts from congress show:
(1) Servicers, make more money from collection and foreclosure than modification,
(2) Mortgage companies and government pay for modification processing but servicers are not held accountable when modification applications are lost, or reprocessed (and application processing fees are paid again).
A third of trial modifications became permanent peaking in October 2009 at 160,000 and dipping to 23,000 in December 2010. The first year after modification 21% of permanently modified mortgages defaulted. Defaults are predicted to grow to 40% in five years, then interest rates increase insuring more will merely eventually default later allowing servicers and mortgages companies to bill twice.
Successful modifications reduce interest from a median 6.63% to 2.0%. 57% extend the length of mortgages, 30% defer principal to balloon payments, just 3% reduce principal. 95% of permanently modified mortgages have less equity, than before modification and most decrease the rate equity increases in property.
Success ratios are Wachovia’s 89%, HomeEq 95%, Bank of America (which took over Countrywide) 30%. The more predatory loan programs were, the worse performance is. 30% of trial modifications were canceled due to incomplete documents. Many were probably lost intentionally because foreclosure is more profitable and actual figures may be worse than what is reported. 21% of trial modifications go into default, 8% are canceled with no reason.
