HAMP Study: Mortgage Servicers Could Have Done Better
A study recently conducted by economists from the Federal Reserve Bank of Chicago, Columbia Business School, the University of Chicago, the Office of the Comptroller of the Currently and Ohio State University concluded that 800,000 foreclosures could have been avoided if mortgage lenders had been able to better deal with the large amount of distressed homeowners who needed help under the Home Affordable Modification Program (HAMP).
The study - which was published by the National Bureau of Economic Research last month - reviewed government data on mortgages and mortgage renegotiations and further concluded that even under optimal circumstances HAMP would only have been able to help one-third of the three to four million homeowners that the program was expected to service.
The study discovered that many large mortgage servicers were inconsistent with program participation - noting that some large servicers offered twice as many mortgage modifications as others in the industry.
Researchers also supposed that private loan modifications became less effective as mortgage servicers intentionally steered homeowners into HAMP in order to receive the federal incentives that were offered with successful HAMP renegotiations.
If anything, this study appears to illustrate just how immense the current foreclosure crisis is and how government programs are doing little to aid distressed homeowners.
However, it is important for distressed homeowners to know that they can take matters into their own hands when government programs fail to deliver on their promises and that there are other options available to them. For example, bankruptcy can stop a foreclosure in its tracks - but this is only the tip of the iceberg for options available to distressed homeowners.
Source: The Chicago Tribune, "Mortgage servicers dropped the ball, study says," Mary Ellen Podmolik, September 20, 2012
Our firm often handles situations when distressed homeowners have been unable to remedy their mortgage woes through government programs. If you would like to learn more about our consumer defense practice, please visit our Chicago Loan Modification page.