HAMP Extended by Obama Administration

THE FOLLOWING ARTICLE IS FROM A REPORT BY REUTERS PRINTED IN THE HUFFINGTON POST.  The extension of the Hamp program will permit modifications both outside of bankruptcy and within the new chapter 13 bankruptcy mediation foreclosure program for a Fort Lauderdale bankruptcy or a Miami or Palm Beach bankruptcy.  Pros and cons for the overall program are discussed in the article.

WASHINGTON, May 30 (Reuters) – The Obama administration on  Thursday said it was extending the life of its signature foreclosure-prevention program by two years to help more struggling borrowers keep their homes.

The Home Affordable Modification Program, or HAMP, was to  expire at the end of this year.

When it was unveiled in 2009, the administration estimated  it would help 3 million to 4 million homeowners avoid  foreclosure by reworking loan terms. So far, however, only about  1.1 million homeowners have benefited from a permanent mortgage  modification under the program.

“The housing market is gaining steam, but many homeowners  are still struggling,” said Treasury Secretary Jack Lew.  “Extending the program for two years will benefit many  additional families while maintaining clear standards and  accountability for an important part of the mortgage industry.”

The program, which draws from the Treasury Department’s financial bailout fund, pays lenders and servicers to rewrite  loan terms for borrowers who can’t make their current mortgage  payments.

The administration has refined the program since its inception to broaden its reach, including expanding eligibility  and increasing payments to mortgage companies that lower  borrowers’ monthly payments.

Still, of the $29.9 billion in bailout funds allocated for HAMP and other housing programs, the Treasury had spent only  about $5.2 billion through March.

Officials declined to estimate how many more borrowers would  benefit from HAMP’s extension. In addition to borrowers who have  received loan modifications, the Treasury said the program had  provided an example for the mortgage industry on how to best  adjust mortgages for those needing aid.

But the program has been faulted by both Democrats and  Republicans and by federal watchdogs for the high number of  recipients who default on mortgages after getting the government  aid.

“This decision solidifies the Obama administration’s place  atop the list of the nation’s biggest subprime lenders,” said  Representative Jeb Hensarling, the Republican chairman of the House Financial Services Committee.

“HAMP is a costly and abject failure that takes money from  hardworking taxpayers, bails out banks that made bad loans, and  forces Americans who struggle to pay their own mortgages to also pay their neighbor’s,” Hensarling, of Texas, said.

Last year, the Obama administration offered incentives to encourage government-run Fannie Mae and Freddie Mac to use the principal-write-down component of HAMP.  However, the companies’ regulator has blocked them from doing  so, saying the potential benefits to homeowners do not clearly  outweigh the potential costs to taxpayers.

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