Short Sale Blog

July 2010 saw more cancellations of government-sponsored loan modifications than new loan modifications.

HAMP, the Housing Affordable Modifications Program, was initiated by President Obama in April 2009 to help homeowners who are struggling to meet their mortgage payments. The program can provide assistance for mortgage holders who want to refinance their mortgage or negotiate a loan modification with their lenders. It also includes opportunities for those who wish to mitigate their losses through short sales.

HAMP helps homeowners looking to modify their loan by giving lenders incentives to negotiate more favorable terms: for example by increasing the time period of the loan and by lowering interest rates. Homeowners start with at least three payments on “trial” before the loan modification becomes permanent.

However, nearly half of the 1.3 million loan modifications that have been negotiated under the HAMP program have been cancelled. This July, the number of new government-sponsored loan modifications grew by its slowest rate since the program started, and there were five times more cancellations than new modifications.

The Treasury indicated last week that there will be more cancellations than new trials for the coming months. This is to clear a backlog of “aged trials” from the program’s early days, when banks were encouraged to approve new trial loan modifications without supporting documents to ensure borrowers’ eligibility.

A total of 422,000 borrowers have received permanent loan modifications through HAMP. Other alternatives HAMP offers to homeowners include negotiating a short sale or a deed-in-lieu of foreclosure.

Seattle Short Sales, Inc. is a specialist in the marketing and short selling of properties in the Seattle area. Please contact us with any of your questions about short sales.