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Home Loan Analysts See HAMP Not Stopping St Louis Home Loan Foreclosures
With the huge number of reported failures of the federal plan known as HAMP, inside senior legislators look as if to be jumping on the band wagon displaying their new found pessimistic viewpoints on where this program may be headed.
There were letters recently shared among one instrumental senator and Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), on the topic of HAMP with Barofsky stating that over one-and-a-half million or so consumers would get any type of mortgage help.
But the sobering reports is that almost 4 million Americans including St Louis home loan owners that actually require this federal aid. Yet, most analysts are despondent at the reality of this lot being achieved.
The reason for this dismal outlook is that less than 200000 or five percent have actually moved forward from the probationary docket into a permanent modification mode.
But if matters couldn't be worse, the inspector general's release warned that many homeowners are at risk of re-defaulting on their St Louis mortgage loans even after getting help under the federal plan.
Again the critics are coming out of the wood works suggesting that these homeowners are irresponsible. But the verity of the matter is, many still owe more money than what their house is worth not mentioning that others have second mortgages.
Without wandering off to a great degree, I think its necessary to mention the abominable acts of not just the huge insurance and banking leviathans but the average person who bought a piece of property they knew they just were not able to afford and did it by taking the only type of loan that could allow them this undeserved asset. Then you have the pure fraudulent actions of those who knowingly lied on their stated income application. Three years later, these acts have come to be known as "liar loans."
Getting back to the matter at hand, Barofsky then displays his further skepticism basically stating that these loan modifications may not be the preferred program to continue offering. The Treasury department had other opinions as to the wide spread criticism.
In a long, drawn out reply included in the report, Herbert Allison, assistant Treasury secretary for financial stability said the system "should be measured by how many eligible consumers are able to avoid the pain and stigma of foreclosure by lowering their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The total sum of permanent modifications is one element, but not the only element of assessing the success."
Whether this federal program meets its overall success or failure is second only to the fact that these key officials want us to view their opinions from their viewpoint and no other.
Allison seems to want everyone to understand that the important reason is not the failing of HAMP, but that Barofsky is simply not gauging its lack of success in the correct manner.
Because Allison clearly points out that permanent modifications are really only one way to help struggling homeowners, this somehow insinuates that he himself doesn't firmly believe his preceding comment.
We cannot ignore the fact that these services are also offering other foreclosure prevention initiatives such as short sales as realistic choices. It is sad that many of these consumers both nationally and locally can no longer measure up financially for any type of St Louis refinancing options.
Yet, most people who have been following this program from its inception were spoon fed the amazing idea that permanent loan modifications through HAMP was the greatest and perhaps the only way the country would see this elusive amount of foreclosures go away.
And as we are finding out, many of these modifications did not include a realistic principal reduction, which means in all likelihood, they will continue to fail.
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