HAMP loan mods fall in November

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The trend continues.

Only 1,853 homeowners in Colorado in November participated  in the required first step to get help with their lenders to stay in their  homes under the Obama Administration’s largest foreclosure program, HAMP, or Home Affordable Modification Program.

That is a 7.6 percent drop from the 2,002 Colorado homeowners in the active trials portion of HAMP in October. The number of people in active trials has dropped from the previous month every month this year. November marked the first month that fewer than 2,000 homeowners were in the early stages of the program.

Earlier this year, the Treasury Department advised loan servivers, those who manage loans and typically decide who receives a loan modification under HAMP, to pre-screen people applying for HAMP to increase their chances of receiving loan modifications. Many local and national experts have criticized the $55 billion program as being ineffective.

But Shannon Peer, director of housing counseling at the non-profit Brothers Redevelopment in Edgewater, wasn’t so critical.

No income, no point being in HAMP

“I think people who are eligible have been receiving them,” Peer said. He said it is true that lenders run certain “risk models” on homeowners, and may determine that an individual borrower is either not fit for HAMP, or it makes better economic sense for the bank to go through with a foreclosure.

Peer has noted that HAMP was created at a time when high-interest rate mortgages were the driving force causing foreclosures. Now, however, it is people losing their jobs, and not having the money to pay a mortgage, even one with a below-market rates.

“It is an issue when you do not have income,” Peer said. “If you do not have enough income to sustain paying even a loan with an interest rate modification, there may be no point to postpone the inevitable.”

The report did show that there are now 7,134 homeowners in the permanent modification program, a 3.6 percent increase from the 8,987 in October. Colorado accounts for 1.4 percent of the HAMP activity.

National snapshot

Nationally, 549,620 permanent modifications have been started. Last month, there were 29,972 new permanent modifications started. However, a total of 729,109 trial modifications have been canceled. By contrast, only 44,972 permanent modifications in total have been canceled.

Everyone in HAMP has had their mortgage rates reduced. Some 57.8 percent of them have had terms extended and 30.1 percent have had principal forbearance. The median monthly housing payment before the modification was $1,434.98, and was reduced to $838.00 following the modifications. That is a median monthly decrease of $524.41

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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