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Home Loan Analysts See HAMP Not Stopping St Louis Home Loan Foreclosures
With the numerous reported failures of the federal bailout program known as HAMP, inside senior officials seem to be jumping on the band wagon sharing their new found pessimistic viewpoints on where this program may be headed.
There were letters recently shared between one key senator and Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), respecting the subject of HAMP with Barofsky saying that over one-and-a-half million or so homeowners would get any type of mortgage assistance.
But the sobering news is that almost 4 million consumers including St Louis home loan owners that actually need this federal aid. Yet, most professionals are despondent at the reality of this number being attained.
The reason for this bleak outlook is that fewer than 200000 or five percent have actually advanced from the probationary program into a permanent modification mode.
But if circumstances couldn't be worse, the inspector general's report warned that many borrowers are at risk of re-defaulting on their St Louis mortgage loans even after receiving help under the federal program.
Again the critics are coming out of the wood works suggesting that these homeowners are irresponsible. But the reality of the matter is, many still owe more money than what their home is worth not mentioning that others have second mortgages.
Without digressing to a great degree, I think its necessary to mention the abominable acts of not just the big insurance and banking leviathans but the average person who bought a home they knew they just couldn't afford and did it by taking the only type of loan that could give them this undeserved asset. Then you have the pure fraudulent acts of those who knowingly lied on their stated income application. Years later, these actions have come to be known as "liar loans."
Getting back to the matter at hand, Barofsky then shows his further skepticism basically alluding that these loan modifications may not be the best program to continue offering. The Treasury department had other opinions as to the wide spread criticism.
In a long, drawn out response included in the report, Herbert Allison, assistant Treasury secretary for financial stability said the program "should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by paying down their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The number of permanent modifications is one element, but not the only element of assessing the success."
Whether this federal program meets its ultimate success or failure is second only to the fact that these key officials want us to view their ideologies from their viewpoint and no other.
Allison seems to want everyone to understand that the important point is not the failing of HAMP, but that Barofsky is simply not measuring its lack of success in the correct manner.
Due to the fact that Allison clearly points out that permanent modifications are really only one way to help struggling homeowners, this somehow suggests that he himself doesn't firmly believe his preceding comment.
We cannot ignore the fact that these services are also offering other foreclosure prevention initiatives such as short sales as realistic alternatives. It is sad that many of these homeowners both nationally and locally can no longer qualify for any type of St Louis refinancing options.
Yet, most people who have been following this program from its inception were spoon fed the amazing idea that permanent loan modifications through HAMP was the finest and perhaps the only way the country would see this insurmountable amount of foreclosures go away.
And as we are finding out, many of these modifications did not include a pragmatic principal reduction, which means in all likelihood, they will continue to fail.
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