After taking many months learning and understanding HAMP and how it works (and in many cases doesn’t), and after sitting through (and tweeting through) the President’s State of the Union Speech, I am admittedly still mulling it all over. Some tout the speech as the longest in President Obama’s career. Others are debating the propriety of the Nation’s Chief Executive chastising the Supreme Court in the House Chamber. Yet despite its length, its controversies and its platitudes, the word “foreclosure” was not used once. And that should be incredibly disheartening for any homeowner concerned about losing their home. As an insolvency professional who works with homeowners in financial crisis, it was for me.
Over the past week, news reports have emerged that HAMP (the Home Affordable Modification Program) is not working. To be clear, a modification is not a refinance; it’s a retooling of the mortgage. The term might be extended, the interest rate adjusted. Yet last night, the only thing President Obama said about the help distressed homeowners might get was this:
The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments. This year, we will step up re-financing so that homeowners can move into more affordable mortgages. And it is precisely to relieve the burden on middle-class families that we still need health insurance reform.
He said nothing about HAMP. He said nothing about how HAMP needs time to work, or how it needs to be fixed. He said nothing about the need to amend the bankruptcy code to allow cram-downs in chapter 13 for owners of single family homes. He did not mention foreclosure – not even an utterance of the word. Nothing. Nada. Zip.
As foreclosures will continue to escalate – and they will, homeowners will find that they have increasingly less options. Stepping up refinancing (whatever that means) to allow homeowners to “move into more affordable mortgages” makes no sense whatsoever. I don’t care if the rate is 1%: who in their right mind is going to borrow $400,000 to live in a home worth less than half that? That’s not a way to own your home; that’s a way to rent your home from the bank. And for clients who ultimately seek a long term solution to their crisis – that is not a solution at all.
What the State of the Union speech (and the GOP Response that followed) demonstrates is that Washington has no long term solution to address what could be an unprecedented tsunami of home foreclosures in the next three years. It means that homeowners need to be proactive in seeking out and getting the help they need, and not assume that political leaders can – or will help. It means that homeowners will have to understand that saving the home will take an attention to detail and a sound strategy.
In other words, to save the homes of millions of Americans, it’s going to take a lot more than hope.
Related posts:
- The State of Our Union
- Mortgage Modification Legislation Update: Citigroup Supports the Bill
- Barnstable County Foreclosure Rate Highest in State
- Mortgage Modification Update: Not so Hopeful
- Mortgage Modification/Cramdown Bill Update
Tags: foreclosure, HAMP, Obama Administration, Yep. We're in trouble.
