How Effective Are Obama's HAMP And Loan Modification Plans?

By: federal loan modification

According to the report, one of the main objectives of the plan was to provide beneficial home loan modification facilities which would help troubled American homeowners to redeem their mortgage loan in a more comfortable manner through reduced interest rates and lowered monthly installment payments.

The plan is specifically designed to address the mortgage delinquency levels and provide opportunities for money lenders to offer effective loss mitigation programs to prevent further foreclosures from taking place. The main idea is to help 3 to 4 million Americans keep their homes, and lead a less stressful financial life. However, there are varied results and opinions which often contradict each other regarding the effectiveness of the HAMP program. The article tries to discuss the loan modification program’s success amongst the mortgage debtors.

The basic question asked by many concerned Americans today is whether the loan modification plan is actually working, and whether stats support the claims and promises put forward by U.S. President Barak Obama prior to his presidency. As per the report submitted by the Treasury Department in November 2009:

* The total number of notices sent by the moneylenders to mortgage loan defaulters is 3.137 million, and these debtors are potentially eligible for the Obama loan modification program.

* The trial period plan offering the HAMP facilities is to be extended, and the plan should be made more effective, since only 33 percentages of the total 3.137 million are eligible, or likely to qualify for the existing plan conditions.

* Till date only 759,408 or 73 percent of the total number of trial HAMP home loan modification applicants have been able to avail the program benefits and able to retain their homes.

* The basic objective of the HAMP plan is to prevent mortgage debtors and delinquents from filing for bankruptcy and avoiding foreclosures. However, during the three-month trial period only 30,650 or 4 percent of the total applicants were provided the much required facilities.

* Totally only 31,382 or 4 percent of the total number of HAMP applicants ended up receiving a permanent loan modification.

* Out of a total of 3 to 4 million possible HAMP applicants, looking at the current rate of individuals actually preventing the foreclosures, the federal and state governments need between 2,968,618 to 3,968,618 more successfully loan modifications to sustain the Obama plan.

* During the HAMP trial period, the applicants have to be consistent in making at least three of the "modified monthly payments" on time, to reap addition benefit of the program. It is possible for the trial applicants to avoid the foreclosure only if they adhere to the HAMP plan for a longer time.

According to the report, 360,165 trials were started in the month of August 31, 2009. For further analysis of the HAMP plan, the experts say they need some additional data coming up in the coming months to give a more accurate picture about how successful the HAMP program is likely to be.

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The HAMP plan sounds great as far as home loan modification is concerned, and theoretically speaking the vast majority of the mortgage defaults should benefit through the plan. However, the report submitted by the Treasury Department highlights certain facts which need to be properly addressed to for sustained success of the Obama initiative plan. The article tries to discuss some of the salient features of the treasury report. Visit ht

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