Closing the coffers to the nation’s largest mortgage servicers is the government’s remedy for big bank’s failure to help struggling homeowners modify their loans. HAMP (Home Affordable Modification Plan) has long been criticized as inept and ineffective but the real problem may be that the program is voluntary. HAMP only works if the banks are ready to play ball with distressed homeowners.
For those of us in the real estate industry, the ineffectiveness of HAMP comes as no surprise. Many of our clients have tried and failed to obtain a loan modification before coming to us for advice and assistance in the short sale process. Their stories have an abysmal similarity. Most have asked their banks for modification due to a reduction in income or prolonged illness. The homeowner sends all of the requested documentation and the modification package to their lender only to hear that the paperwork was never received. Many clients have submitted several times only to hear once again that the paperwork cannot be found . The system is laborious even for those well versed in real estate. On top of that, what homeowner has the time, knowledge or patience to sit on the phone for hours and attempt to get in contact with a negotiator?
Cutting the purse strings to these 3 big banks is a start. But so much more needs to be done to prevent the misery and financial ruin that so many American families are experiencing today.
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Comments
You are right regarding the punishment. Regards the program, I personally thing is Good (not bad or excellent). For banks that know how to make it run like Indymac, Litton, LPBS, EMC, Chase (which I have great success with) the program is a great success. UNFORTUNATELY not all bank are like that, and most borrowers have no clue what to submit or how to follow up. I think it takes a lot of negligence and self interest as well. From the many clients I have had, (from homes of 90K to huge ones at 1.7MM ) there is one that spoke spanish and neither knew how to read or to write, but he was o top of eveyrhing (bringing correspondence, requesting status, informing himseld, etc... ) while there are business owenrs and professionals that get frustrated. BUT we can discuss this for years.
The bottom line -for me- is that the program is GOOD, but the problems are on the process, incentives and results of the modification itself. I believe all non profit agencies should be trained to submit complete packages for all this borrowers, so all lenders have complete packages, and prolong the validity of the provided financials. Also, a unique platform for submission is required (like equator or so), and uniform way for status as well. Finally, the 5 year fixed period, and after that going 1% up each year until it reaches the cap (usually at 4.5%) will bring tons of foreclosures again in 2014,2015 and 2016, so be prepared. This ill people hasn't been cured, and the HAMP pill will only last them 5 years, so we will see in 5 years! Good bless us.