Yesterday the Department of Treasury and HUD released a report that there has been a "significant acceleration in the rate" in which Home Affordable Modification Program ("HAMP") trial period mortgage modifications are being converted into permanent modifications. The report that as of December, more than 110,000 permanent modification have been approved of which 66,000 have been accepted by the borrowers. The HAMP was "designed to offer through 2012 up to 3-4 million homeowners reduced mortgage payments that are affordable and sustainable."
The administration estimates that several million homeowners are eligible for the program. During the 4th quarter of 2009, the number of servicers agreeing to participate in the HAMP with respect to their non-GSE loans rose from 63 to 102. This is in addition to the approximately 2,300 other lenders who service GSE loans (owned or guaranteed by Fannie Mae or Freddie Mac).
The report relates the following steps made in the permanent mortgage modifications (by "waterfall steps") : 1. interest rate reduction (100% of mortgages), 2. term extension (43.2% of mortgages), and 3. principal forbearance (26.6% of mortgages).
Saturday, January 16, 2010
Friday, January 15, 2010
HAMP Notes
Housing Wire reports that the number of permanent mortgage modifications that the Bank of America has made after a trial loan modifications under the Home Affordable Modification Program ("HAMP") rose from 98 mortgage as of the end of November, 2009 to 3,200 by January, 2010. The HAMP program began in March, 2009.
Bank of America reportedly has more than 200,000 customers in HAMP trial modifications and started more than 34,000 new trial modification in December, 2009.
Bank of America reportedly has more than 200,000 customers in HAMP trial modifications and started more than 34,000 new trial modification in December, 2009.
Tuesday, January 12, 2010
HAMP Mortgage Modification and Chapter 13 Bankruptcy
The effectiveness of the HAMP or "Obama Plan" for mortgage modification has been widely criticized. Many homeowners complain that it is extremely difficult to communicate with their mortgage servicers.
One way to attempt to overcome this difficulty is to combine a request for a HAMP mortgage modification with a chapter 13 bankruptcy filing. Although the bankruptcy laws cannot force a mortgage servicer to approve a HAMP mortgage modification request, the filing of a chapter 13 bankruptcy in conjunction with a HAMP request may be of benefit in many cases. In fact, the Bankruptcy Court in the Southern District of Florida has recently begun to confirm some chapter 13 plans that provide for the anticipated payment under a HAMP modification request. Although the Bankruptcy Court cannot require a mortgage modification, it can prohibit the mortgage servicer from resuming a mortgage foreclosure until it properly considers a HAMP modification request and duly denies or accepts it.
A typical chapter 13 plan would provide for the anticipated HAMP modified mortgage payment as 31% of the homeowner's gross income. The 31% amount would cover principal, interest, taxes, insurance and associations.
The chapter 13 plan would also provide for the avoidance of any second mortgage that is wholly "under-water" and for a dividend to unsecured creditor. Some mortgage servicers may be more favorable to the modification of the first mortgage if the homeowner is no longer required to pay the full amount of his second mortgage, credit cards, and other unsecured debt.
One way to attempt to overcome this difficulty is to combine a request for a HAMP mortgage modification with a chapter 13 bankruptcy filing. Although the bankruptcy laws cannot force a mortgage servicer to approve a HAMP mortgage modification request, the filing of a chapter 13 bankruptcy in conjunction with a HAMP request may be of benefit in many cases. In fact, the Bankruptcy Court in the Southern District of Florida has recently begun to confirm some chapter 13 plans that provide for the anticipated payment under a HAMP modification request. Although the Bankruptcy Court cannot require a mortgage modification, it can prohibit the mortgage servicer from resuming a mortgage foreclosure until it properly considers a HAMP modification request and duly denies or accepts it.
A typical chapter 13 plan would provide for the anticipated HAMP modified mortgage payment as 31% of the homeowner's gross income. The 31% amount would cover principal, interest, taxes, insurance and associations.
The chapter 13 plan would also provide for the avoidance of any second mortgage that is wholly "under-water" and for a dividend to unsecured creditor. Some mortgage servicers may be more favorable to the modification of the first mortgage if the homeowner is no longer required to pay the full amount of his second mortgage, credit cards, and other unsecured debt.
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