John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... The trend continues.
Only 1,853 homeowners in Colorado in November participated in the required first step to get help with their lenders to stay in their homes under the Obama Administration’s largest foreclosure program, HAMP, or Home Affordable Modification Program.
That is a 7.6 percent drop from the 2,002 Colorado homeowners in the active trials portion of HAMP in October. The number of people in active trials has dropped from the previous month every month this year. November marked the first month that fewer than 2,000 homeowners were in the early stages of the program.
Earlier this year, the Treasury Department advised loan servivers, those who manage loans and typically decide who receives a loan modification under HAMP, to pre-screen people applying for HAMP to increase their chances of receiving loan modifications. Many local and national experts have criticized the $55 billion program as being ineffective.
But Shannon Peer, director of housing counseling at the non-profit Brothers Redevelopment in Edgewater, wasn’t so critical.
No income, no point being in HAMP
“I think people who are eligible have been receiving them,” Peer said. He said it is true that lenders run certain “risk models” on homeowners, and may determine that an individual borrower is either not fit for HAMP, or it makes better economic sense for the bank to go through with a foreclosure.
Peer has noted that HAMP was created at a time when high-interest rate mortgages were the driving force causing foreclosures. Now, however, it is people losing their jobs, and not having the money to pay a mortgage, even one with a below-market rates.
“It is an issue when you do not have income,” Peer said. “If you do not have enough income to sustain paying even a loan with an interest rate modification, there may be no point to postpone the inevitable.”
The report did show that there are now 7,134 homeowners in the permanent modification program, a 3.6 percent increase from the 8,987 in October. Colorado accounts for 1.4 percent of the HAMP activity.
National snapshot
Nationally, 549,620 permanent modifications have been started. Last month, there were 29,972 new permanent modifications started. However, a total of 729,109 trial modifications have been canceled. By contrast, only 44,972 permanent modifications in total have been canceled.
Everyone in HAMP has had their mortgage rates reduced. Some 57.8 percent of them have had terms extended and 30.1 percent have had principal forbearance. The median monthly housing payment before the modification was $1,434.98, and was reduced to $838.00 following the modifications. That is a median monthly decrease of $524.41
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It would be interesting to compare the number of trial and perm. HAMP loan mods with the change in the number of foreclosures filed this year over last. I’m guessing they are close. With 60% of the HAMP ultimately going into foreclosure anyway, we are just delaying the inevitable. We will have fewer foreclosures, but getting through the pipeline will take much longer.
The government didn’t start breaking out the active and permanent modifications until December 2009. So starting with the next report, I will have year-over-year comparisons for trial vs permanents.
I don’t think these stats in any way reflect the numbers of people who could actually qualify for loan modifications if the servicers would follow the guidelines for HAMP and other options. I recently went through a ridiculously protracted review for modification with Wells Fargo Home Mortgage, which in no way followed the servicing guidelines set by the owner of the loan.
I think word is just getting out to homeowners that mortgage modification, as practiced by the big banks apparently with the blessing of the administration, Treasury, Congress and the “regulatory” agencies is nothing but a big scam.
At the same time, the mainstream media is finally covering the astounding amount of fraud going on with foreclosures. If I had heard before I requested a modification that my loan servicer was committing blatant foreclosure fraud (and getting away with it), I never would have tried for the mod.
If Wells Fargo would have helped me when I first notified them I was soon going to be in trouble on my mortgage, I would never have gone into default. That’s supposed to be what these programs are for … Instead, they give false hope and string people along. It’s no wonder so many permanent modifications don’t work out – the banks’ game-playing drags out the review until people are just stretched too thin. As I said, it’s a big scam. Too bad. There are good, hard-working folks out there who just tried to do the right thing and work with their lenders, but got totally jerked around.
At some point you have to ask if the federal programs are to help or are they to corrupt the numbers so that it is impossible to analyze the market…… or maybe, for political purposes……? Don’t be astonished.