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U.S. President Obama's Home Loan Assistance is Losing Steam

The number of people availing the government's Home Affordable Modification Program (HAMP) assistance declined in from 17, 771 in September 2010 to 16, 634 in October 2010

The declining number of beneficiaries of the assistance program is expected to decline even more to a point where the dropouts overtake the borrowers actually receiving permanent assistance.

Around 26, 679 people have defaulted on their modified loans in October, increasing the overall number of dropouts to 756, 000 since the government's Home Affordable Modification Program was launched in the spring of 2009. The Treasury Department administers the HAMP, which initially aimed to extend assistance to around three to four million individuals. The total number of borrowers who have obtained permanent loan modification under the program stands at 483, 000.

The agency rolled out HAMP in efforts to bring down the mortgage obligations of homeowners struggling to meet them thereby helping them to hold on to their homes in the face of imminent foreclosure.

The program is widely criticized for being flawed. Legislators believe the program does not have the teeth to overcome housing problems brought about by declining household incomes, unemployment and the long documentation process implemented by banks for borrowers wanting to modify their loans.

The rate of mortgage delinquency appears to have declined in the third quarter of 2010 by 0.72 percentage points based on new data released by the Mortgage Bankers Association. The association was not optimistic about a sustained improvement, though citing the estimated 4.5 million foreclosures expected to reach the market in the coming three to four years, adding to the four million already sitting on the market.

Lawmakers have summoned banking executives to shed light on allegations that they are using "robo-signers" to expedite foreclosures, which incensed advocates for homeownership. Banks have denied the accusations. But the problems experienced by banks, in terms of processing and paperwork for loan modifications as well as the snail paced movement of loan modification initiatives by the government, such as HAMP, have renewed public disdain for banks. Banks raised public ire when the Treasury department launched bail-out programs for them, during the last financial crisis with the use of taxpayers' money.

Source: Free Articles from ArticlesFactory.com

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