HAMP was designed to help homeowners facing foreclosure and bankruptcy. The program has offered too little, too late.
For those that don’t know what the acronym HAMP means, it represents a program put together by President Obama, referred to as the “Home Affordable Modification Program.” It had good intentions, and was supposed to be designed to help close to 4 million householders facing bankruptcy and foreclosure. Unfortunately, good intentions are about all the program did manage to deliver.
There is quite a bit of speculation over why the HAMP program failed, and most people lay the blame at the doorstep of the complicated qualifications people needed to meet. The target group it was supposed to help could not understand how to access the program. Add to that an initial mere 10 percent slashing of the principal, and it amounted to not being worth even trying to use it.
It looks like the program won’t have too much of an effect on bankruptcy filings, not that its original intention was to prevent that. However, it was intended to help some homeowners keep their homes. While this program may have helped a few, the stark increase in filings over the last few years is dismal.
Foreclosures are virtually the number one cause of people seeking bankruptcy protection, and if you are staring foreclosure in the face, but still happen to have a sustainable income, you just might qualify for HAMP. The advantages are tangible for homeowners who are still employed and have a high interest rate. This program has the ability to lower an interest rate by up to 2 percent, extend a mortgage term up to 40 years and waive interest charges on a certain portion of the principal. While this sounds good on the surface, the biggest glitch so far, is being able to qualify for HAMP.
To qualify, you must be behind on your mortgage payments or be facing a risk of defaulting. You should have gotten your mortgage before January 1, 2009 and you must live in the mortgaged property. The principal balance should not be greater than $729,750 for a one-unit house. While this sounds easy enough on first glance, there are some loopholes that can backfire on the homeowner. For instance, if the owner is approved for a modification, they have a three month trial where their usual mortgage payment is made. Once they meet that requirement, the modification is to become permanent.
However, one large loophole in the program is that the lender gets to make the determination if the modification is permanent. Needless to say many homeowners have reported being put off by the bank or denied for a variety of reasons, typically leading to a legal battle; the last thing a stressed homeowner needs.
If you don’t have a sustainable income or enough money to face possible legal difficulties, this program may be a waste of time for you. If you are already in a bad financial situation, an added legal confrontation won’t help matters any. The best advice an Iowa bankruptcy lawyer may give you, with regard to HAMP, is try to avoid it and discuss your situation in detail with the lawyer. Bankruptcy isn’t easy, and the more complex it becomes, the more confusing things are for the person trying to get out from under a crushing debt load.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit http://www.iowachapter7.com or call 1.877.888.1766.
