By Mark Huffman
ConsumerAffairs.com
June 22, 2010
Fewer people enrolled in the government's Making Home Affordable (HAMP) program in the last month and -- of those who enrolled -- an increasing number dropped out.
The latest report from the Treasury Department shows that, since the program debuted last year as an answer to the rising tide of foreclosures, only about 340,000 homeowners have received a permanent loan modification.
Many more have received trial modifications, in which their payments are lowered for three to six months while their applications are processed. A large number of these homeowners, for whatever reason, have been rejected by loan servicers for a permanent modification.
Those whose permanent modification request is rejected must then repay the lender the full amount of their mortgage payments, plus fees.
Loan servicers blame the high number of rejected applications on the homeowners, telling the Treasury Department that many homeowners are also failing to make the reduced mortgage payments. Others, they say, don't qualify because they earn too much money.
Complaints about modification efforts began from the start and consumer nightmares have been well documented.
For many homeowners, making any kind of mortgage payment is difficult because they have lost their jobs. Housing market analysts say it's no coincidence that foreclosures have skyrocketed at the same time unemployment has hovered around ten percent.
Big jump in May
So far, 436,000 homeowners have failed to move from a trial to a permanent modification, with 100,000 of those rejections occurring in May. Interestingly, the government data show about half the number of people dropped from HAMP have been able to work out some other type of mortgage help from their servicer. This alternative help, however, is usually not as generous as that offered under HAMP.
Obama administration officials say HAMP is just one of the weapons government has at its disposal to shore up the housing market. Treasury officials point out that millions of people took advantage of federal tax credits for the purchase of a home in the last year. The tax credit program expired at the end of April.
"The housing market is significantly better than anyone predicted a year ago," said Housing and Urban Development Secretary Shaun Donovan. "Obviously we're not out of the woods. Our housing market remains fragile."
