The Home Affordable Modification Program (HAMP), launched in 2009, and ending in December of 2012, seems like a good solution for many Americans struggling to meet their monthly mortgage payments during the current economic downturn. Under HAMP, mortgage loans can be modified to make monthly payments more affordable for qualified homeowners. Borrowers initially make lower payments on a trial basis. If they pass the trial, i.e. make their payments on time (if you make a payment a day late, you do not pass the trial period),their mortgages are converted to loans with lower interest rates, sometimes as low as 2 percent for five years. These new loans are also extended so that they can be repaid over a longer period of time.
Since the program’s inception, more than 1.6 million homeowners have received trial modifications. About 700,000 of the applicants have had their mortgages permanently lowered as of April 2011, while a greater number of homeowners, about 843,000, have dropped out of the program. More than 5 million American homeowners are struggling with their mortgage payments, but the majority have not been helped by the HAMP law.
In Maryland, 24,000 homeowners have qualified for the modification program. This means more Maryland homeowners may be able to keep their homes than before the program existed.
Other Maryland residents, however, have not been as fortunate. The program has many shortcomings. For example, some banks do not process the modification requests in time for homeowners to prevent foreclosure. The issue in these cases is not the qualification of the borrowers, but the timing. By the time the applications are processed, the information is no longer considered current. Under HAMP, the banks and the borrower have 30 days from the date the application is first sent to determine if the borrower is eligible. Because the banks loose the paperwork or just simply fail to process the application timely, many borrowers fail to get a HAMP loan.
Additionally, according to a counselor who works for the Housing Initiative Partnership in Hyattsville, Maryland whose group helps approximately 1,500 homeowners a year, at least half of the applications submitted are not processed in a timely manner. Many of the homeowners qualify for the program but are required to repeatedly resubmit forms, causing many to give up in frustration.
Banks admit they need to improve in some areas, particularly those involving customer service. One way to solve the problem in Maryland is to improve communication between homeowners and banks. It is also helpful for the homeowner to keep the confirmation certificate from their fax machine which will confirm that the lender received all the faxes that were sent.