Participating In HAMP Cut Down On Principal Amount Owed For 77% Of Eligible Homeowners

The latest numbers on the government-backed Home Affordable Modification Program are in, and there’s some good news in there for most of the homeowners who participated. About 77% of those who went through modification (and didn’t have a mortgage tied to Fannie Mae or Freddie Mac) in July enjoyed a nice little cut to the principal amount they owe.

When you get down to it, it’s a small number of homeowners who received a loan balance writedown of any kind, at 4,778. That’s compared to the 14,1117 who entered trial loan modifications in July and an additional 16,767 who received permanent loan modifications, reports the Treasury Department.

Unfortunately for homeowners, the amount who get a cut on their balances is going to stay low, as the Federal Housing Finance Agency has decreed it won’t let any mortgages secured or owned by Fannie or Freddie to get principal writedowns. Those two companies back about 60% of mortgages, which means only 6,189 total mortgages were eligible in July.

Reports the Chicago Tribune:

Mortgage servicers are required to consider, but not required to offer, a principal reduction for non- Fannie and Freddie loans if the loan-to-value ratio of the mortgage is greater than 115 percent. In February, Treasury announced that it would triple the financial incentives paid to investors who agree to cut the loan balances of eligible underwater borrowers.

So how much money did these homeowners end up cutting out of their totals owed? The median amount forgiven was $63,580, said the Treasury. Quite a pretty penny, indeed.

In addition to the good news for those homeowners, the government stressed the need for mortgage servicers to step it up when they’re dealing with their customers. Overall, nine mortgage servicers were called out as needing to improve their customer interactions.

Most HAMP participants see cuts in principal [Chicago Tribune]

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  1. SkokieGuy says:

    Instead of tripling the incentives to banks, why not give the money directly to the underwater homeowners?

    And why screw Fannie / Freddie mortgage holders. Many are underwater as well.

  2. Harry Greek says:

    Nice – most corps get tax breaks, to the point where they don’t pay anything to the government,… yet enjoy the legal system when said corps sue, as well as dip their hands into the til, when they are too big to fail.

    But, if you are underwater, you deserve to be there. Oh, but not if you are a corporation!! Quickly! Throw tax money at the job creators*!!

    * note: who are creating jobs overseas, at lower costs, but still charge the same price for the services/goods pushed out to market… a market made up of poor unemployed people.

    • TuxthePenguin says:

      Wow, so much to unpack…

      First thing to remember – a corporation does not pay taxes. Living, breathing people do. We only tax at the corporate level for the ease of collection. Imagine if we treated it like a partnership and the millions who own Chase had K1s sent. Second, those tax breaks you malign were put there by both parties to “encourage” certain industries. A pessimist might say its graft… but so what is your solution to that?

      Second, why are you against creating jobs overseas? Are you a jingoist? If there is growth overseas (ie, China) why not grow there to accommodate demand? And if you can make something cheaper overseas, even accounting for transportation, all other things being equal, why wouldn’t you? When was the last time you decided to pay $2 for a $1 apple?

      The funniest thing about your post was “but still charge the same price for the services/goods…” and you don’t realize that they can charge the same price because their inputs are cheaper… if they didn’t move overseas, the costs would have gone up…

      • crashfrog says:

        Imagine if we treated it like a partnership and the millions who own Chase had K1s sent.

        And imagine if your grandma had wheels – why, she’d be a wagon!

        Corporations aren’t partnerships. That’s the entire point of a corporation, to not be a partnership – corporations have judicial personhood and as such can own things that aren’t themselves owned by any of their employees. Coca-cola isn’t just a big drawer of cash or some kind of accounting simplification – it’s a legal entity, separate from the people who make it up, and capable of delegating legal agents, entering into contracts, owning property, holding accounts, and, yes, paying taxes. The cash income of Apple Computer isn’t something that shows up on Tim Cook’s taxes, because he’s not the recipient of it. Apple Computer is, and should pay taxes on that income.

    • NeverLetMeDown2 says:

      “Nice – most corps get tax breaks, to the point where they don’t pay anything to the government”

      Yup, that $230BN in corporate income taxes paid in 2011 is zero. Yup.

  3. Dustbunny says:

    Some day I hope to be one of these homeowners too. I applied for a HAMP refi in May through Wells Fargo (which holds the current mortage – otherwise I would have gone through my credit union). The latest delay in processing is because the fax machine in the [redacted] Wells office wasn’t working. Apparently nobody noticed that for 3 weeks. Sigh.

    • benminer says:

      I just refinanced through Harp 2.0 and I told the loan processor right up front that I absolutely refuse to fax a single document and that if he could not accept scanned PDF files emailed to him then I would find another lender. I never had to fax a thing and nothing was lost.

      • Dustbunny says:

        I emailed everything, but this was some internal faxing between various Wells offices. I can’t figure out how their fax machine was broken for 3 weeks and no one noticed.

  4. Caddyshack says:

    I think that fact that the Federal Housing Finance Agency will not let Fannie Mae or Freddie Mac mortgages get the same write down is pure BS. I need that write-down because I lost 50% of my houses value and because of my career I cannot even do a short-sale.

    • NeverLetMeDown2 says:

      As someone (a taxpayer) who would have to cover that loss if you got a writedown, I disagree.

      • Smiling says:

        I also disagree. Bad investments are the responsibility of the investor, not the taxpayers or banks. Buying a house isn’t a guaranteed investment. It is actually a terrible investment once you figure the fact that you pay as much in interest as you do for the house. Then, add in upkeep and the fact that property values fluctuate, an it makes for an even crappier investment. No one owes anyone anything for the lost value of houses anymore than someone owes everyone who loses money on stocks something.