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The potential power of federal programs

McGookey Law • May 23, 2013 at 11:22 AM

The stories of Samantha and Bill

The Home Affordable Modification Program, aka HAMP, was enacted into federal law four years ago as the current administration’s signature mortgage relief program. Meant to stem the rising tide of foreclosures, by all accounts HAMP has been nothing but a total failure. The reason for this fact can be summed up in two words: No enforcement. By this what I mean is that as part of the program, the government failed to set up any meaningful way of checking up on the banks to make sure they were actually abiding by the law, and qualifying deserving homeowners.

The reason the banks chose to routinely ignore HAMP and violate Americans’ rights under federal law is quite simple – they make more money through foreclosure than the relatively paltry sum offered by the government under HAMP. Thus, without any downside in the way of punishment for their transgressions, the decision for the banks is a no-brainer – do not offer HAMP and foreclose instead. I have seen this phenomenon at work dozens, if not hundreds of times over.

The most recent examples of this are the stories of Samantha and Bill. From a legal procedural standpoint, these two homeowners were at the opposite ends of the spectrum. One, Samantha, was staring down the barrel of the foreclosure gun with a sheriff’s sale just weeks away, while Bill was not yet in foreclosure. Despite this difference both enjoyed a common bond in one critical and helpful way in terms of saving their homes from foreclosure: They both qualified for HAMP.

With the HAMP card in hand, we filed a motion in Samantha’s case to vacate the foreclosure sale. By doing so, we were essentially asking the court give her bank an opportunity to do the right thing, qualify Samantha for HAMP, thereby allowing her to save her home. The court granted our motion, and cancelled the sale. We now have the breathing room to do what I know will happen — achieve a great loan modification for Samantha, with a significantly lower monthly payment, keeping her in her home for good.

Bill’s situation is even easier to resolve. Not yet being in foreclosure, we have begun the process of succinctly pointing out to it that he qualifies for HAMP relief, and warning it that its failure to qualify him is a violation of federal law and potentially leading to serious repercussions. Once a bank learns that it could be punished, I’m sure that we will see a whole new demeanor on it’s part; a willingness to deal in good faith with Bill toward the end of keeping his home. Can you put the power of HAMP to work for you?

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