In a way, over the past several years I’ve looked at President Obama’s signature mortgage relief program, the Home Affordable Modification Program, otherwise known as HAMP, as both the good news and bad news at the same time.
The good news is it can lead to extraordinary mortgage relief for qualifying homeowners. In fact, I’ve seen cases where the homeowner’s mortgage payment is slashed by as much as two-thirds.
The bad news? There are literally millions of homeowners across the country struggling to make their mortgage payments who qualify for HAMP, but are not offered or not
allowed to qualify for it by their loan servicers.
How do I know this? From the hundreds of homeowners I’ve dealt with, over half qualify for HAMP. Statistically speaking, it is fair to extrapolate that number to a national scale and say millions of Americans are what I call False HAMP Denial Victims.
The fact is that in the world of loan securitization, where the party to whom the homeowner makes his or her monthly payment is not the owner of the mortgage, but rather a loan servicer, foreclosure is profitable business. This is so because the loan servicer is compensated on a percentage of the loan balance. Thus, as a loan goes into default and the balance owed rises, servicing that loan becomes ever more lucrative.
When Hanna came to see us a month ago we quickly determined that she fell squarely into the False HAMP Denial Victim category.
Her story is even more compelling given that she is in the process of going through a divorce with her husband, who had left her behind in the home with their teenage child.
Based on her income alone, the $1,000 per month mortgage payment is well beyond her reach. However, because she is not receiving support from her husband, and her income is rather low, she qualifies for HAMP. And not only does she qualify, she qualifies in such a big way that she and her son’s home will end up being more economical for them than a small apartment.
By our calculations, that payment, including taxes and insurance, should be around $450 per month.
With stories like Hanna’s, we can say that HAMP sometimes provides not just good news, but absolutely fantastic news.
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Kate Eyster contributed to this article.