According to a recent survey conducted by the Government Accountability Office (GAO), more than 75% of housing counselors who responded stated that American homeowners have had either “negative”, or even “very negative” experiences in dealing with the Home Affordable Modification Program (HAMP.)
The GOA survey attracted 500 responses in October 2010, with approximately one hundred and thirty housing agencies surveyed. Of all the counselors who participated in the survey, only a measly nine percent said that borrowers had shared positive experiences in relation to HAMP. A statistic of that nature is of course hardly reassuring or comforting.
The Treasury Department has raised some concerns with regard to the time difference between the release of the survey and present HAMP performance figures. However, it has conceded that at least some of the problems that counselors have highlighted continue to persist. Almost 50% of all counselors who communicated with the GAO shared that they were receiving information that was often confusing and inconsistent.
Lengthy processing time – The HAMP program is severely undermined due to lengthy processing times. This is an issue that over 30% of the counselors complained about. It is stated in the HAMP guidelines that lenders must inform homeowners inside of 30 days whether or not they have been approved for a trial home loan modification. It’s a nice sentiment, but in reality, over 85% of the counselors have reported that this time period is proving to be closer to 4-7 months, and even longer in certain cases.
Loan mod documentation vanishing – Then there is the ‘little’ issue of loan modification documentation simply vanishing into the great unknown. In addition, many homeowners have reported what appears to be a deliberate move on the part of their lenders to keep them in the dark and to provide them with precious little clarifying and empowering information.
Miscalculations – As if all of this wasn’t bad enough, there is also the increasing problem of miscalculations. When the GAO went about producing the survey, just less than one million American homeowners had been denied access to a HAMP trial. That number has steadily risen to 1.3 million as of February of this year. The primary cause of borrowers being rejected is the fact that their home loan payments are already less than 31% of their total monthly earnings. Over 50% of the surveyed borrowers said that loan modification applications were denied because lenders allegedly calculated the homeowner’s monthly earnings incorrectly.
It was reported by counselors that lenders made mistakes when calculating self-employment earnings, that they used the earnings of one or more non-borrower (as opposed to a cosigner) in doing their calculations, and that they even included income generated from temporary sources such as unemployment and other benefit platforms.
Single point of contact - While the Treasury has instituted changes subsequent to the release of the GAO survey such as insisting that homeowners be provided with a single point of contact, and setting up an online loan modification calculator, counselors are insisting that not enough has been done.
Litton Loan Serving, a company owned by Goldman Sachs, has been accused of superficially sweeping through modification applications in an attempt to work through existing backlogs. Well over half the counselors who were surveyed said that it was crucial that the Treasury enforce sanctions against lenders who fail to perform well under the HAMP program. The GAO stated in June of 2010 that the Treasury had still not taken steps to clarify and formalize the consequences lenders would face who were not in compliance with the program.
Is it just me, or is all of this just starting to sound all too monotonous? Homeowners continue to be at the mercy of sharks and unlawful institutions, it seems. This is why Caal (mycaal.com) represents such as important cog in the wheel of home loan modification. Someone needs to provide struggling homeowners with unbiased and empathetic assistance. At Caal we are committed to doing exactly that.
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About Carla Ghosn
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I am CEO and Founder of Caal (mycaal.com) keen on helping American homeowners save their home, save their dream. If you need help with your loan modification, visit www.mycaal.com to see how Caal assists you in pre-qualifying your loan for approval, as well as preparing and printing your loan modification package online. |
What is the point of HAMP if their performance is so poor?
HAMP has been disappointed. Their point was to help as many as 4 Million people since 2008. They messed up for all of the reasons shown above and more. Every person who has been denied a loan modification has a story. The program is getting better. But for things to improve people need to understand the program better and voice their opinion and share their challenging stories.
Yep! I know a lot of people who have tried to get loan modifications. Most of them have very negative experiences. Some take too long to get an answer. Other feel as if their lives are scrutinized for every penny they ear or spend. Where is the bailout money that was supposed to help the American consumer? Who are they kidding? They promised and failed.
The government should have made it a condition that banks should bail out homeowners as part of the process of the government bailing out the banks. Otherwise, such bailout is phony.
Yes you are right. You and so many other people now believe that the bailout program was phony and it was. It bailed out the banks and big corporations, and pennies went to the people.
I heard about bad experiences with loan mods, but did not know it was as prevalent.
HAMP needs a new leader – perhaps hired from the business world – someone like Carla?
I do agree that HAMP needs a new leader. Not to promote my company, but all of the users that we have said that they very much needed Caal Software to help them understand the loan modification software. One user proposed that we present to the Housing Communities in various cities so we can let people know that there is real help out there. I would love to take a bigger role with HAMP but as you said, on the business side, and also in regards to introducing new ways to empower the American consumer that is so under-represented.
In any case, thank you for being a big supporter and suggesting that I lead HAMP. I wish I could help out as many people as possible, so your support in spreading the word out is very appreciated. The US needs this.
These are well researched articles from key sources. Such government and regulatory agencies should be pointing the contradictions and taking steps to remedy these problems. Alas, they failed.
By default, Carla Ghosn of MyCaal is educating the public to empower them to get a better chance to succeed in their loan modification efforts so they can stay in their homes rather lose to foreclosures.
What kind of communities would America get when millions of families lose their homes?
This is a great point. Most likely this will be the subject of one of our future blogposts.
You are absolutely right re: “millions of families …lose their homes”.
Imagine the domino effect of more foreclosures, leading to more homeless families.
In return, this will ruin their credits. With bad credit, they can’t rent at decent prices. They can’t buy cars at decent interest rates. Their cost of living may increase significantly, and their borrowing abilities will be highly damaged. This impact will be felt strongly by the self-employed. Small businesses used to be a big part of America GDP. How will that impact the GDP? The bottom line, instead of the banks helping these people to become or remain self-sufficient and contribute positively to the economy, they are now being subjected to foreclosure and bankruptcies and becoming more dependent on the government for help. No wonder why the government is becoming bankrupt?
Yes, and the irony is that the banks loose big too.
As Carla pointed out in previous article, with foreclosure, vacancy factor, cost of sales, administrative, the banks may get a fraction of the value, had they worked out a reasonable modification with the homeowners.
Additionally, the banks’s reputation are down the the toilet. But unfortunately their brand image and people’s negative experiences with them may not affect their business much. I am not sure. People still have to bank with someone.
HAMP guidelines are not enforceable. I have talked to many HOPE counselors while working on my loan mod and they told time that it is up to the bank, no matter what HAMP says, to decide. The people who are getting these loan modifications are trying super hard, are working out their paperwork correctly, and usually have negative equity.
very good one
I hope you found it helpful