Federal HAMP Loan Modification Program Ending December 31, 2016

A part of a recent omnibus spending bill, Congress has decided to end the HAMP Loan Modification which offered loan modifications and principal reductions to homeowners struggling to make their mortgage payments or in foreclosure.

Contained in the bill is the following language: “The Making Home Affordable initiative of the Secretary of the Treasury, as authorized under the Emergency Economic Stabilization Act of 2008 … shall terminate on December 31, 2016.”

Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the Financial Services Committee, released the following statement:

“For more than four years, I have been front and center in trying to help homeowners and protect the American taxpayer by ending President Obama’s wasteful and failed mortgage modification program. I am pleased to say that day has finally arrived.

“With passage of today’s consolidated appropriations bill, Congress has finally ended the Home Affordable Mortgage Program (HAMP), which harmed the very people it was intended to help: those who were struggling to keep their homes after the financial crisis. While I would prefer the money saved by eliminating the program be put towards reducing our deficit, I am grateful that we have finally acknowledged HAMP for what it is: a failed government program that hurt those in need.”

Despite claims be critics and Republicans that HAMP hurt homeowners more than it helped, we have had many successful loan modifications for our clients, some with large reductions in principal and interest rates.

The issue with the critics’ arguments (the non-political ones to be clear) is that some homeowners could not afford to own the home they lived in no matter if the lender reduced principal and interest to the lowest levels the program allowed for.  It fails to factor in unemployment of underemployment, as well as low or reduction in salaries of homeowners who at one time could afford their payments.  

There is some truth to the criticism in that there were gross abuses of the modification program, like banks playing hide the ball with documents sent in etc., but when the end of the line came many homeowners could still not afford the home they lived in even with principal reductions and low 2% interest rates fixed for 30 years.  The government simply could not put more income into homeowners’ pockets to make some type of affordable payment.

If you are interested in a loan modification 2016 is the time to act.  Contact out office ASAP as loan modifications can take months and must be started now to be complete before the expiration of HAMP.

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