Obama Home Affordable Modification Program (HAMP) in Washington

Obama Home Affordable Modification Program (HAMP) in Washington

The Obama administration has devoted $75 billion of funding in effort to ease mortgage terms and is now helping thousands of Washington homeowners secure a successful loan modification and avoid foreclosures. Under Obama's Home Affordable Modification Program (HAMP), only 235,000 loans have been modified, leading many homeowners with doubt and uncertainty. So far, the Fed’s plan to help around 7 million people modify their loan in order to afford monthly mortgage payments and avoid foreclosure.

Contrary to what many may believe, most Washington homeowners do qualify for home loan modification and government assistance. Under the Obama Home Affordable Modification Program (HAMP), your mortgage payment cannot exceed 31 percent of your gross income. Because most loans exceed this 31% number, nearly all borrowers are technically eligible for HAMP assistance.

Banks and lenders use numerous excuses for denying a loan modification, including the claim that new guidelines are too rigid or that they do not actually own the loan, but only service it, so are coincidentally unable to modify the loan. On the contrary, servicers are able to modify loans, regardless of these reasons.

Incentives are provided to banks and servicers for modifying borrowers’ loans to a more affordable payment if they qualify for a three-month trial period. There can be no late payments during the three month trial period in order to test if you are able to make the newly modified payments. Many lenders are putting distressed homeowners into a loan modification on a “trial basis,” however many end up simply defaulting later due to an inappropriate modification.

In order to receive financial incentives under the HAMP program, banks are required to collect statistics on how many customers in default they contact, however are not obligated to re-write any loans. Countless other servicers simply do not have the experience or expertise to get successful loan modifications done, resulting in thousands of Washington homeowners unable to acquire a loan modify. As a result, very few of the so-called loan modification specialists have consistent success modifying loans. [Examiner, 8/31/09]

Questions to assure the quality of a modification company:

1. How many loans have they successfully modified?
2. What is their success rate/percent?
3. Will they provide the borrower with three references of local homeowners they have helped in the past three months?
4. Did they write sub-prime loans prior to entering this new line of work? If they did, they are part of the problem and none of the solution.

While deferring delinquent payments and adding them to the principle, many lenders are swapping borrowers’ fixed rate mortgages for variable rate mortgages, leaving the homeowner to the mercy of the market. Other lenders follow through the foreclosure process while allowing the borrowers to live in their homes as renters. Though you may stay in the house, the bank owns the home and can evict you at any time they wish. Since there are renters to maintain the property and carry the debt, the bank doesn’t have to sell your home while market values are low. [Examiner, 9/1/09]

Washington homeowners exploring the options of Obama's loan modification program but that didn´t qualify because the value of their home dropped, as well as anyone on the brink of foreclosure, can get a loan modification if they comply with the programs requirements.

All Washington homeowners should immediately confirm whether or not they qualify for help under the Obama HAMP Program guidelines, and explore all the options now available to them.