The HAMP foreclosure prevention program is suppose to help four million homeowners facing foreclosure; but the program is far from reaching its goal. The second wave of foreclosures is already upon us and the HAMP foreclosure prevention program is failing to make major progress in convincing lenders to modify toxic mortgages.
The Treasury reported recently that as of March, nearly 228,000 troubled loans qualified under the Obama plan for long-term payment reductions; another 108,000 long-term modifications were pending. That's up from February, but still far behind the need. Currently, some six million borrowers are more than 60 days delinquent.
Since January of this year, nearly 1 million foreclosure filings have been posted nationwide. And with so many Americans delinquent on their mortgage payments, that number could increase significantly. But despite this, the mortgage industry has made in clear that they are not willing to voluntarily modify mass numbers of clearly toxic mortgages. Both JPMorgan Chase and Wells Fargo told a Congressional panel that they were not willing to fully embrace the administration's latest foreclosure-prevention plan which calls for lenders to modify a loan's principal balance so that borrowers can regain some equity and have a more affordable monthly payment. I don't know why everyone is so surprised by the mortgage industry's response. They are not going to voluntarily cut into their profits, even if they were responsible for creating this foreclosure crisis. The wisest and most prudent decision would be for legislators to pass legislation allowing bankruptcy judges to modify the principal balance of clearly toxic mortgages. This is the most effective method to strike at the heart of this foreclosure crisis.