The Treasury Department and managers of the Home Affordable Modification Program (HAMP) are scrambling to figure out why homeowners who used the government’s bailout mechanism to save their homes are re-defaulting on their payments.
The program, originally designed to assist homeowners who were facing foreclosure following the 2007 sub-prime crisis, has reportedly saved 1.2 million people from losing their homes, but a report from the Special Inspector General who oversees the government’s Troubled Asset Relief Program (TARP) says that the loan modifications that were supposed to get American families back on their feet aren’t working as well as expected.
If your mortgage payment is $1500 monthly, and you just lost your job and are collecting $800 in unemployment insurance monthly, then it is impossible for you to make good on your loan. Even if the government helps to reduce your mortgage payment to $850 monthly and provides you with emergency funds to cover all of your other expenses like food, health insurance and utilities, you still can’t service your debt.
It’s that simple. Read more >>