Most borrowers who have had their mortgages modified through a government-sponsored program will redefault within 12 months, according to a report released Wednesday. Between 65% and 75% of loans that are modified through the Home Affordable Modification Program (HAMP) but not backed by the federal government are likely to go bad, according to the report released by Fitch Ratings, a N.Y.-based credit-rating agency. The main reason these borrowers continue to struggle is that HAMP does nothing to solve the rest of their debt problems, the report added. ”Many of these borrowers still have very heavy levels of other debt,” said Diane Pendley, a Fitch managing director, “auto loans, credit cards and other expenses.
The HAMP modifications reduce housing expenses down to 31% of income but do not touch these other obligations.” Currently, according to the Fitch report, about half of prime borrowers who lose their homes now do so through foreclosure. The other 50% go through short sales, in which they sell their homes for less than what they owe the bank, or deed-in-lieu, a transaction where the bank takes back the property directly and forgives the outstanding balance. The servicers have been encouraged to rev up their short sale engines by the Treasury Department, which runs HAMP and its sister program, Home Affordable Foreclosure Alternatives (HAFA), which provides cash incentives to the parties who agree to short sales. Now, when borrowers re-default on HAMP mods or other bank workouts, banks are much more likely to offer help to execute a short sale or deed-in-lieu.
If you or someone you know is upside down and needs help call 800 559 6560 today. Get Las Vegas foreclosure help before it’s too late.
Economists in the United States, are worried that their country’s maybe facing a double-dip recession. A disappointing employment situation and a lack of consumer confidence is adding to concerns that the economy doesn’t have enough momentum to fully recover. This story, comes courtesy of Reuters. By many measures, the US economy seems to be in recovery mode. But there is no guarantee it will stay there. And that’s the subject of a growing debate that has even Fed Chairman Ben Bernanke weighing in. Economist Maria Fiorini Ramirez, CEO of MFR Inc., said, “I think that we will avoid a double dip recession however I also do think that we are going to take a long time to come out of this recession and growth is going to be very slow, it’s going to be ups and downs.”
