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HAMP Gets a D Grade After 2009 Sees Low Permanent Modification Rates

January 5, 2010

As Riverside County loan modification attorneys, we've spent most of 2009 watching, and being disappointed by, the progress of federal foreclosure prevention efforts. A Dec. 31 article in the Modesto Bee sums up the state of those efforts under the Home Affordable Modification Program, or HAMP. The Obama Administration launched the program at the beginning of the year, hoping to reverse the damage to the U.S. real estate market caused by a flood of foreclosures. But 2009 is ending without much real progress, the article said, with borrowers repeating many of the same complaints about lenders' behavior that they had in March and July.

The situation has changed in some ways, the article said. The focus on foreclosures caused by subprime or predatory loans has shifted to a focus on foreclosures on prime borrowers crippled by job losses. And HAMP has created a lot of trial modification. However, the article said, only 4.3% of those trial modifications had been made permanent as of November. Many of the homeowners who once complained that lenders weren't responding to requests for a loan workout are now complaining that lenders aren't responding to requests to make the trial modification permanent. One borrower told the newspaper that she received foreclosure auction notices for her home twice, even though she's part of a trial modification that's supposed to suspend foreclosure. Another complained that she received a permanent modification offer that raised her mortgage payment well above the 31% limit set by HAMP.

Our Cerritos loan modification attorneys have watched this situation throughout 2009. Thanks to numerous media reports with stories like these, as well as several studies of the economics confronting lenders and loan servicers, we have concluded that they do not really want to make loan modifications at all. If it is more profitable to foreclose, at least in the short run, lenders will most likely choose that option. As a housing counselor in the article says, some borrowers simply walk away after months or a year of consistent seeming incompetence from lenders. However, it's also clear that lenders want to seem as if they are willing to make modifications, which may explain why so many have joined the voluntary HAMP program in the first place.

Howard Law LLP negotiates aggressively with lenders and loan servicers to get our clients real, sustainable changes to their loans. Our Fullerton loan modification lawyers have a strong record of results, helping our clients get lower interest rates, changes to repayment periods and even changes to loan structure or principal amount. That's true even in cases where the lender has continually ignored phone calls and letters, lost paperwork or failed to adequately communicate with borrowers or its own branches. We start each case by reviewing the record for evidence of predatory mortgage lending or negligence by the lender, both of which could allow us to sue the lender and get its attention quickly. Our goal, however, is not litigation so much as to help clients win reduced mortgage payments that let them keep their homes for the long term.

Howard Law offers free, confidential case evaluations, so you risk nothing by speaking to us about your case and your legal rights. To set up a meeting, please contact us through the Internet or call us toll-free at 1-800-872-5925 today.