Research Shows HAMP Fell Short for Many Homeowners

Data from a new study conducted at the Columbia Business School indicates that HAMP simply fell short and failed to help many borrowers.

2012-11-06

November 06, 2012 (Press-News.org) According to current data, foreclosures continue to remain high all across the nation -- proof that the real estate market is far from stabilized. The Home Affordable Modification Program, known as HAMP, put forth in 2007, was designed to help homeowners modify their mortgage to a sustainable monthly payment and avoid foreclosure. However, data from a new study conducted at the Columbia Business School indicates that the initiative simply fell short and failed to help many borrowers.

Tomasz Piskorski, an Edward S. Gordon Associate Professor of Real Estate at Columbia Business School, conducted research and analyzed modification rates from roughly 30 million mortgage loans. And, according to Piskorski, the HAMP initiative resulted in only a slight reduction in foreclosures across the nation. Further, he says, that "permanent renegotiations by HAMP will reach just about one-third of its targeted three million to four million indebted households."

Potential Reasons Behind the Failure

One reason HAMP potentially fell short of its predicted success rate could be that the program was strictly voluntary. According to research data, several big mortgage servicers simply wouldn't agree to renegotiate mortgage loans for qualified borrowers -- despite the $1000 government incentive per modification put forth.

Another reason, Piskorski indicates is due to a performance deficiency of some mortgage servicers. For example, in June 2011, the Treasury Department found three mortgage servicers miscalculated a mortgage borrower's income and improperly denied them modification or HAMP participation.

Options for Homeowners

Luckily, new federal rules are due to be implemented November 1, 2012, and will expand the HAMP eligibility requirements for homeowners. No longer will the program be only for borrowers delinquent on their payments. Those underwater or without the ability to pay may become eligible.

However, bankruptcy may be a viable option for individuals unable to pay their mortgages and drowning in other types of debt, such as medical bills and credit cards. Speaking with a bankruptcy attorney to learn how to get a fresh start and regain financial footing is advised.

Article provided by Law Office of Stephen Ross
Visit us at http://www.pennsylvaniabankruptcypros.com

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