Monday, November 1, 2010
Is HAMP for real?
Home Affordable Modification Program (HAMP) has been around since 2009, but has it resulted in any tangible benefit? If no, why not? Well, the better questions to ask are: is HAMP law? Is it mandatory? Is anyone entitled to a loan modification if they prove that they qualify for one under the HAMP guidelines? The answer is No, No, and No! No one is entitled to a loan modification under the HAMP guidelines. The incentives for the banks to follow the guidelines are so meager, I would call them non-existent. What is more, even if you get a loan modification under HAMP, the "savings" from the modification still need to be paid back at some future time, such as upon the sale of the house, expiration of the loan term, etc. So your payments under HAMP are not really modified. They are deferred! It is like borrowing even more money to stay afloat after an improvident refinance or purchase. And you thought the government (and the bank) would take care of you... In many cases, cutting your losses and filing for bankruptcy sooner rather than later is the most sensible, as well as ethical, approach.