Loan Modification California -- Home Affordable Modification Program (HAMP)

The Home Affordable Modification Program (HAMP) is a federal program that was created to promote loan modifications California and in other states that have high numbers of distressed properties.  The intent of the program is to help minimize the number of foreclosures and reduce the losses that the lenders and the federal government would incur.  Regrettably, the program is not achieving its goals.

Greedy Banks Not Approving Loan Modifications-California

Banks receiving the bailout funds are required to participate in this program.  However, it appears that lenders are attempting to benefit from the stimulus funds, and at the same time, minimize the losses that they might otherwise absorb if they were to grant more permanent loan modifications in California and the other distressed states.

 As of December of 2009, only 2,000 homeowners (less than 1%) have been granted a permanent loan modifications from over 650,000 total applicants. Presently, indicators show that the approval rates have improved somewhat, but are still at unacceptable levels.

The applicants were placed in trial modifications, which required them to make their monthly payments.  The vast majority have never receiving final approval.  As a result, many homeowners were becoming increasingly agitated by the banks because their saving were being eaten-up by the payments.   Eventually, many homeowners were cut from the program on technicalities without ever receiving approval.

This program is seen by most as a complete failure.  The only winners are the banks who seemingly deceived the homeowners to get the extra payments from them.

Lender Coersion With Campaigns of Guilt and Fear

A prominent law school published a study indicating that lenders are engaging in a campaign of guilt and fear to coerce families into continuing or resuming their monthly payments.

• The lenders are not willing to accept the financial losses that would result from permanent modification, despite having received federal bailout monies. 
• Some lenders have implemented strategies to increase the penalty and fee revenues from non-performing loans.
• For homeowners that clearly cannot afford their loans, it appears evident that many lenders are attempting to get as much money from the applicants as possible before foreclosing.  This approach also keeps the property occupied (reducing vandalism), and yields some revenue for the lenders.

What the Obama administration is quickly learning is that the federal government cannot easily legislate loan modification laws and regulations that modify contractual agreements in the private sector.  The banks are playing hardball with the homeowners (and the federal government). In the final analysis, lenders are operating for a profit and will use or circumvent loan modification laws California and HAMP to their financial advantage. 



Enclosure