In the past, many have criticized the federal government’s various home loan assistance programs. In order to help more people find some amount of relief from their problems, the U.S. Department of the Treasury is expanding these initiatives.
One particular area of criticism for the Obama administration was its Home Affordable Modification Program, which was designed to help underwater homeowners make their mortgages easier to handle in the face of significant economic strain, according to a report from financial news site The Street. And now, HAMP is being expanded in an effort to help struggling Americans stay in their homes.
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The broader qualification standards were originally announced in January — and came with the caveat that incentives paid to investors that offered reductions on consumers principals would be tripled from their previous rates — but went into effect on June 1, the report said. Now, HAMP is accepting applications for the expanded program.
“The Administration’s programs have established critical standards and accountability for mortgage servicers that have compelled the industry to provide higher quality assistance to struggling homeowners; however, servicers still have more work to do,” Treasury Assistant Secretary for Financial Stability Tim Massad said, according to the site. “This month, expanded eligibility for the Making Home Affordable Program becomes available to help more families benefit from the program’s sustainable assistance and homeowner protections.”
And according to new data released by the Obama administration, HAMP has already been somewhat successful, the report said. Through the end of April, more than a million homeowners received a principal modification through the program, saving an average of $535 on their mortgage bills every month, totaling some $12.7 billion in savings to date. In all, 86 percent of homeowners who entered the program in the last 22 months have been able to get a permanent modification following an average trial period of 3.5 months. Principal reductions have averaged about $68,267 in all, a decrease of roughly 31 percent.
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Originally, HAMP, and its sister initiative, the Home Affordable Refinance Program, were heavily criticized by consumer advocates because they were seen as being too difficult for nearly all homeowners to qualify for, and have, to this point, helped far fewer people than originally intended.
Image: half_empty, via Flickr