HAMP ProblemsOne of the biggest problems with mortgage modifications and in particular the HAMP program is that most homes are underwater. The current mortgage modification program does not present a solution to homes lacking equity. In many cases the modification may reduce the interest rate, reduce the payment, and create a longer loan term. This does not solve the major problem for most homeowners, which is many homes lack equity. If the modification does not address the negative equity issue many homeowners will not benefit from the modification.
I see clients every day who live in a neighborhood where homes comparable to theirs are selling for at least $50,000 less than what they currently owe. This makes it difficult for the individuals to want to keep the home knowing they will have to pay on the home for many years before they see any equity in the property. If the modification was able to address the lack of equity and lower the payment, that would allow many of my clients to keep their homes. In many cases the bank would also benefit by allowing individuals to keep their home, it would allow the bank to save the costs associated with foreclosure. The other benefit would be to the neighborhood and city by allowing individuals to stay in their home, instead of creating a lot of vacant housing.
Write a comment
- Required fields are marked with *.