Mortgage expert and one-time Fannie Mae Chief Credit Officer Edward Pinto says a claim made by Treasury Secretary Tim Geithner that 500,000 homeowners have entered the Obama administration’s Home Affordable Modification Program (HAMP) is ridiculous.
In fact, he says, the program is rapidly becoming: “I will pretend to modify your loan if you pretend that you will make the payments,” he told the Business Insider Web site.
According to Michael Young, vice chairman of the Mortgage Bankers Association, 99 percent of the loan modification packages are incomplete.
This has led to speculation that many of the 500,000 will never submit the necessary documentation or will not qualify.
Only about 1,200 borrowers of the 200,000 attempting to enter the program last July have entered the permanent modification phase.
However, in an attempt to reach its goal of 5000,000 modifications by Nov. 1, the government has loosened some of the guidelines, including allowing borrowers to state their unemployment benefits as income.
Lenders and mortgage servicers are concerned that a sizable number of qualified borrowers will fail to make all the payments required during the trial period, using the HAMP application process to delay their impending foreclosures by another 5 or 6 months.
According to insidebclending.com, as of Sept. 1, only 1.26 percent of HAMP modifications had become permanent after the anticipated three-month trial period.
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