The President’s announcement last week to impose new mortgage relief strategies brought much criticism from policy skeptics. Citing issues with current mortgage relief efforts, many have been pointing towards the disappointing outcomes of plans already in place. If the current programs are meeting expectations, how can a simple addition to the plan make much difference?
Problems With The HAMP
In 2009, the Home Affordable Refinance Program was enacted allowing for underwater homeowners to refinance their mortgage into lower rates. The idea was to lift heavy qualification standards and open the doors for more homeowners to take advantage of the lower rates. Since then less than 900,000 borrowers have utilized it’s benefits, far less than the forecasted 4 million the program was designed to help.
Why haven’t more people used the HAMP? In short, the lending institutions have not been as lenient and forthcoming with refinancing offers as intended. Attempting to minimize profit loss, Fannie Mae and Freddie Mac continued to impose large fees and outrageous conditions onto newly refinanced mortgages. As news has spread about the less than helpful efforts of the nation’s largest lending institution’s practices, many homeowners have been scared off from looking into such options.