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With the numerous reported failures of the federal plan known as HAMP, inside senior officials appear to be jumping on the band wagon sharing their new found pessimistic ideas on where this program may be headed.
There were memos recently exchanged between one key senator and Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), regarding the subject of HAMP with Barofsky stating that over one-and-a-half million or so homeowners would get any type of mortgage aid.
But the sobering headlines is that nearly 4 million consumers including St Louis home loan owners that actually need this federal help. Yet, most professionals are despondent at the reality of this amount being attained.
The reason for this dismal outlook is that fewer than 200000 or five percent have actually moved forward from the trial program into a permanent modification mode.
But if things couldn't be worse, the inspector general's report warned that many consumers are at risk of re-defaulting on their St Louis mortgage loans even after acquiring help under the federal program.
Again the critics are coming out of the wood works suggesting that these consumers are irresponsible. But the truth of the matter is, many still owe more money than what their home is worth not mentioning that others have second mortgages.
Without digressing to a great degree, I think its good to mention the abominable acts of not just the big insurance and banking leviathans but the average person who bought a house they knew they just couldn't afford and did it by taking the only type of loan that could deed them this undeserved asset. Then you have the pure fraudulent acts of those who knowingly lied on their stated income application. Two years later, these acts have come to be known as "liar loans."
Getting back to the matter at hand, Barofsky then shows his further skepticism basically stating that these loan modifications may not be the best program to continue offering. The Treasury department had other assessments as to the wide spread criticism.
In a long, drawn out response included in the brief, Herbert Allison, assistant Treasury secretary for financial stability said the program "should be measured by how many eligible consumers are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The number of permanent modifications is one element, but not the only element of measuring the success."
Whether this federal program meets its ultimate success or failure is second only to the fact that these main officials want us to view their ideologies from their viewpoint and no other.
Allison seems to want everyone to grasp that the important point is not the failing of HAMP, but that Barofsky is simply not gauging its lack of success in the correct manner.
Since Allison clearly points out that permanent modifications are really only one way to help struggling homeowners, this somehow suggests that he himself doesn't firmly believe his earlier comment.
We cannot ignore the fact that these services are also offering other foreclosure prevention initiatives such as short sales as realistic options. It is sad that many of these homeowners both nationally and locally can no longer measure up financially for any type of St Louis refinancing options.
Yet, most people who have been following this program from its inception were spoon fed the amazing concept that permanent loan modifications through HAMP was the best and perhaps the only way the country would see this insurmountable amount of foreclosures go away.
And as we are finding out, many of these modifications did not include a reasonable principal reduction, which means in all likelihood, they will continue to fail.
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