Back in 2008 when the foreclosure crisis first began to obliterate communities and families, the promise of helping homeowners avoid foreclosure seemed to be bright less than a year later.
HAMP, a program specifically designed to stop foreclosures came onto the scene promising to help up to 5 million homeowners remain in their homes. But as we all know, the HAMP program has failed to deliver on its promises and many homeowners facing foreclosure are actually worse off now than they were before they tried to get help from HAMP. So what is at the core of HAMP's failure? There are several weak spots in the HAMP foreclosure prevention program; but one that isn't spoken of often is the fact that the HAMP program attempts to vet homeowners based on who is deserving and who isn't. This is a very vague target and one of the reasons why the program has failed. A foreclosure prevention program based on merit? We could have told you that would not work. A better foreclosure prevention program would be based on need.
HAMP should be designed to help those who need it the most, not those who "deserve" it the most. Much like bankruptcy, a program that helps people avoid foreclosure based on their need is more likely to succeed. Of course this need-based foreclosure prevention program hasn't been created because that would be too right and fair to ordinary debtors. But what's really telling is that when it came time to rescue banks from the foreclosure crisis, no one dared speak of how deserving (or not) banking institutions were. All they spoke of is how certain banks were too big to fail and how we need to save the banks before "the world implodes." Well the world is still imploding when it comes to foreclosures and our failure to put in place sensible programs designed to help those in need is aiding further wealth destruction.