Report: Foreclosure Rescue Program Not Working
President Obama's foreclosure rescue program, the Home Affordable Modification Program (HAMP), is struggling, according to a new report issued by the Treasury Department. According to the report, almost half of homeowners enrolled in the administrations mortgage program designed to provide relief have been dropped. Nearly 630,000 people who have tried to get their payments lowered through the program have since been turned away. The situation suggests there will be an increase in foreclosures over the next six months.
Borrowers have complained that the rescue program is a nightmare of red tape. CNN reports that many borrowers have complained that the banks have lost their documents and then wrongfully claim that the borrowers never sent in their paperwork. The banking industry disputes this claim. Bankers also say the Obama administration strong armed them into accepting borrowers into foreclosure rescue without insisting on proof of their income. They say many of the applicants were disqualified or dropped out after the banks attempted to collect the proper information.
The Obama administration disputes the assertion that they pressured banks into the HAMP rescue program. They argue that lenders are making significant cuts to borrowers' monthly payments and that many mortgage companies have alternative programs for borrowers who drop out of the program.
Borrowers who are on the risk of foreclosure have a number of options available. The most important thing to remember is to pay attention to the documents you receive and do not ignore anything from lenders. One excellent resource for foreclosure prevention (also called loss mitigation) can be found at www.fha.gov/foreclosure/index.cfm. Additional resources can be found below.
Related Resources:
- How to Avoid Foreclosure by Reducing Your Mortgage (FindLaw)
- Avoid Foreclosure: Help for Struggling Homeowners (FindLaw)
- Be Tax Savvy! Deducting Mortgage Interest (FindLaw's Law and Daily Life)
- Bankruptcy Information Center (provided by Rosenbaum Law Offices)