7 in 10 Denied Mortgage Modifications
By Dan Garner, Aug 11 2016 07:21AM
The U.S. Treasury Department reported to Congress on July 26, 2016 that since its inception in 2009, the Homeowner Assistance Mortgage Program (HAMP) had a rejection rate of 7 out of 10 applicants. Thanks to this abysmal approval rate, they have only spent roughly half of the $37.5 billion allocated by Congress for the program. The Obama administration predicted it would help 4 million homeowners, while today fewer than one million are in the program.
Citibank, Chase, and Bank of America each denied more than 3/4 of the applications they received, and these 3 banks accounted for about half of the total 4 million denials over the past 7 years. The failure of the program was not due to lack of interest -- over 6 million homeowners applied for relief. But only 1.8 million were offered a trial modification, and 1.4 million were offered permanent modifications.
The report said that applicants routinely wait more than a few months for a response, and there is widespread lack of compliance with the rules among all the servicers. The horror stories are familiar to everyone who tries to help homeowners in the process, and I can attest to the frustration as I have worked on some applications for longer than a year. It is obvious to consumer advocates that the servicers had no intention of negotiating in good faith with homeowners, and as a result the program is a joke.
HAMP applications will stop being accepted at the end of this year, but it is clear that the program will not be missed by anyone. Its fatal flaw was that it was voluntary, not mandatory, and its administration was in the hands of the very institutions who brought about the housing crash. Thus, it was doomed to fail from the very beginning, and the big banks are merely going through the motions to give the appearance of compliance with the law's intent.