Data released by the Treasury department revealed that number of people helped by the Obama Administration’s HAMP program continued to fall in October. In October, only 16,634 homeowners got permanent modification, compared to 17,771 in September. The number of cancelled modifications exceeded the number of permanent modifications.
Around 26,679 borrowers dropped out of the program in October. This amounted to a total of 756,000 borrowers who were delinquent on mortgage payments since inception of HAMP, in spring 2009. Around 483,000 borrowers have been granted permanent modification under the HAMP. The aim of the Treasury was to target three to four million homeowners, but now they have reduced the target.
The HAMP (Home Affordable Modification Program) was launched by the treasury to help struggling homeowners who wanted to retain their homes though they were in danger of foreclosures.
However, many consider the program to be defective. As lawmakers point out that it has failed to reduce the strain on homeowners who have been impacted severely by high unemployment, economic recession as well as red tape enforced by banks which make it difficult to achieve permanent modification of loans. Fresh data revealed a modest fall in mortgage default rate in quarter 3. There was a fall of 0.72% percentage points from 9.13% in prior quarter.
But bankers painted a dismal picture for the future with about 4.5 million homes to hit the market for foreclosures in the next 3 years with 4 million already foreclosed upon.
Banks are already fighting a scandal of robo-signers to speed up the process of foreclosures. Robo-signers are low level employees of servicers who signed away thousands of foreclosure documents without paying attention to facts contained. This scandal infuriated consumer advocates and resulted in hearings of bankers before incensed law makers.
The shoddy paperwork scandal along with slow conduct of modifications under HAMP has put lenders and servicers under fire. Law makers have emerged with alternatives like a fund that would compensate homeowners who wrongly suffered foreclosures through improper procedures.
State Attorneys General, who are carrying on a separate probe, are trying for a deal with the mortgage industry that would revamp industry practices, such as seeking loan modification for struggling homeowners to avoid foreclosures.
The fund created would be modeled on that created for BP Oil spill. It is expected that the financial system and some borrowers could suffer due to the problems of documents of foreclosures, which could result in huge costs for banks.
Original post: http://www.e-foreclosuresearch.com/blog/efforts-to-curb-foreclosures-fail-other-alternatives-proposed/ on E-ForeclosureSearch.com, your source of HUD foreclosures.