**
DCG posted: " LocalNews8: Borrowers who received help through the
government's main foreclosure prevention program are re-defaulting on their
mortgages at alarming rates, a federal watchdog said in a report released
Wednesday. Nearly 1.2 million mortgage modific" Respond to this post by
replying above this line
New post on *Fellowship of the Minds*
<http://fellowshipofminds.wordpress.com/author/dcgere/> Borrowers in Obama
housing program
re-defaulting<http://fellowshipofminds.wordpress.com/2013/07/26/borrowers-in-obama-housing-program-re-defaulting/>
by
DCG <http://fellowshipofminds.wordpress.com/author/dcgere/>
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LocalNews8<http://www.localnews8.com/lifestyle/money/watchdog-borrowers-in-obama-housing-program-redefaulting/-/461672/21137896/-/y77kcz/-/index.html>:
Borrowers who received help through the government's main foreclosure
prevention program are *re-defaulting on their mortgages at alarming rates*,
a federal watchdog said in a report released Wednesday.
Nearly 1.2 million mortgage modifications have been completed since the
Home Affordable Modification Program (HAMP) was first launched four years
ago. *Yet more than 306,000 borrowers have re-defaulted on their loans and
more than 88,000 are at risk of following suit*, the Special Inspector
General for the Troubled Asset Relief Program (SIGTARP) found in its
quarterly report to Congress.
In addition, the watchdog found that *the longer a homeowner stays in the
HAMP modification program, the more likely they are to default*. *Those who
have been in the program since 2009, are re-defaulting at a rate of 46%,
the inspector general found.*
HAMP, which was launched by the Treasury Department at the height of the
foreclosure crisis, aimed to help as many as 4 million borrowers avoid
foreclosure by making their payments more affordable through reduced
interest rates, extended loan terms or, in some cases, reduced mortgage
principals.
Not only has the program fallen far short of that goal but with each year
of the program, *a growing number of homeowners have re-defaulted*, the
inspector general found. "Treasury needs to research why so many borrowers
are dropping out of the program," said Christy Romero, the head of SIGTARP.
The inspector general said it found some "clear patterns" in its own
research. Homeowners who were most likely to re-default were the ones who
received the smallest reduction in their loan payments or overall debt, *were
still underwater on their mortgage or had subprime credit scores and high
overall debt at the time the modification took place*.
The Treasury is currently researching the performance of modifications
under the HAMP program and working on ways to improve the re-default rates,
a Treasury official said at a press conference on Tuesday.
Treasury also noted that most of the re-defaults were high risk to begin
with and were inked during one of the worst financial crises since the
Great Depression.
As of April 30, *taxpayers have lost some $815 million on the permanent
mortgage modifications that have re-defaulted, the inspector general
reported*. As part of the Troubled Asset Relief Program, Treasury allocated
$19.1 billion to the HAMP program. So far, it has spent $4.4 billion, the
inspector general said.
*Nevertheless, the government has extended the program for another two
years, until the end of 2015.*
To improve HAMP's performance going forward, the inspector general also
suggested that Treasury work with mortgage servicers to create an early
warning system that will enable it to reach out to at-risk homeowners
before they default. "Treasury pulled out all the stops for the banks, they
should do the same for homeowners," said Romero.
DCG
*DCG <http://fellowshipofminds.wordpress.com/author/dcgere/>* | July 26,
2013 at 3:45 am | Categories:
Economy<http://fellowshipofminds.wordpress.com/?cat=17656840>,
Obama's America <http://fellowshipofminds.wordpress.com/?cat=12285619> |
URL: http://wp.me/pKuKY-mE4
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