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Obama's HAMP Makes Minimal Dent in Helping Struggling Homeowners
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In its February 28, 2011 issue, The Wall Street Journal highlighted the failure of the Obama Administration's Making Home Affordable Program (HAMP) in helping struggling homeowners with loan modifications. Citing dismal statistics of successful modifications, 1 in 4 of the 2.7 million applicants who submitted application to HAMP were successful in having their monthly mortgage payments reduced. The remaining 75% of applicants either did not qualify or were disqualified from the program after having been initially accepted.
HAMP's objective at the outset was to use taxpayer dollars, forecasted to be $75 billion, to combat the rising number of foreclosures by assisting homeowners to stay in their homes through reduction of interest rates on loans and extending loan terms. The results have been disappointing to say the least. The Wall Street Journal quotes Neil Barofsky, the former Special Inspector General who oversaw the program, who faults the administration for its inadequate analysis and partially developed guidelines. The program "continues to fall short of any meaningful standard of success," Barofsky stated in a January 2011 released report. Instead of President Obama's projection that $75 billion of taxpayer money was necessary for HAMP, the government spent $1 billion thus far. Others blame HAMP's failure on the strict qualification criteria, which immediately eliminates a large percentage of homeowner applicants.
Moreover, an army of strong critics of HAMP are found amongst House Republicans. Republicans, in their efforts to make sustantial cuts across the board and exercise fiscal discipline, have been outspoken against HAMP and are determined to throw the program on the chopping block. Republican Congressman Spencer Bachus (R., Ala.) said, "in an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners."
It remains to be seen what course the federal government decides to take, since the Administration and Congress are completely at odds as to how to address the number of U.S. foreclosures, which are only projected to get worse through 2011. Unfortunately distressed homeowners and the housing market will continue to wait and suffer the consequences of perpetual government gridlock.
To read the WSJ full article, visit
http://online.wsj.com/article/SB10001424052748704692904576166982594828812.html |
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Posted By Elizabeth Ermel on
March 01, 2011 09:00 am |
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