The latest reports from the Treasury Department is showing that only 340,000 homeowners have received permanent loan modifications as part of the HAMP foreclosure prevention program, far fewer than many had hoped would receive help. Unfortunately far more homeowners facing foreclosure receive temporary loan modifications and then are booted out of the program. About 466,000 homeowners facing foreclosure who were approved for temporary loan modifications never made it to the permanent loan modification program. For those homeowners and the many more who aren't able to get any help due to various reasons including unemployment, the HAMP program simply lacks the teeth it needs to effectively battle this foreclosure crisis.
If our legislators are truly interested in stopping the foreclosure crisis, they really need to look at the foreclosure problem in a holistic manner. There are several ills contributing to the foreclosure crisis and handling each one separately will not be effective. For one, right now unemployment is driving the high number of foreclosures. Any foreclosure prevention program that does not address homeowners who are unemployed will probably be a huge failure. Unemployed homeowners are facing four major problems 1) unemployment is often chronic and long-term, 2) unemployment insurance benefits rarely pay enough to cover the mortgage and related costs to owning a home 3) mortgage companies are not usually willing to offer deferments that cover the duration of a homeowners unemployment and 4) foreclosure prevention programs are only focused on homeowners who are still employed. The HAMP foreclosure prevention program must address these four issues if it is to experience any significant progress in combating the foreclosure crisis.