The government’s attempts to curtail the housing crisis have not achieved the broad plan outlined shortly after President Obama took office, although the Home Affordable Modification Program has slightly exceeded predictions, The Wall Street Journal reported June 6.
According to the Journal, in Dec. 2010, the Congressional Oversight Panel, which supervised the 2008 financial rescue, predicted that HAMP would only prevent 700,000 to 800,000 foreclosures, noting that the program’s chances for success “are unlikely to improve substantially in the future.”
As of April, the three-year-old HAMP program has surpassed that forecast, the Journal reported. Approximately 802,000 homeowners kept their homes due to permanent loan modifications, up from nearly 795,000 in March, according to figures released June 6 by the U.S. Department of the Treasury.
The HAMP program provides financial incentives to lenders to help consumers avoid foreclosure by lowering their mortgage payments. As a result of limited participation, the government has expended only about $3.23 billion on the program; $30 billion has been spent on the financial industry rescue, according to Treasury statistics, reported by the Journal.
The administration has been attempting to restructure its housing efforts over the past year to increase enrollment as the November election draws closer, the Journal reported.
In January, officials stated that borrowers experiencing difficulties would be granted an additional year to enroll in the program, and they shared plans to expand payments to banks in order to convince them to more actively reduce loan balances.
In the interim, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, has spent several months reviewing a Treasury proposal to offer incentives for mortgage write downs, the Journal reported. The FHFA presently does not permit write downs and has voiced concerns that doing so would promote other borrowers to purposely default.
The Journal reported that even absent Fannie and Freddie involvement, approximately 55,000 borrowers in HAMP been given reduced loan balances and remain in the program, according to the Treasury report; the median write down is nearly $69,000 or 31 percent.