HAMP, or the Home Affordable Modification Program, an initiative that the Obama administration has been pursuing recently, is missing quite a few of its intended marks. Like its name suggests, HAMP was intended to target 3 million struggling homeowners at risk of foreclosure by working with their lenders to lower or modify monthly mortgage payments so that these individuals could stay in their homes. Of course, like any program the government pushes, there are many flaws. HAMP is no exception.
According to the U.S. Treasury Department, there have been over 5,800 trial modifications and over 9,200 permanent modifications in Nevada through 2010. These numbers pale in comparison to the numbers that the Obama administration wanted to see. That is, if the true policy intention was to make permanenant modifications.
That is always the hard part about judging policy effectiveness. You really don't know what the policy architects actually had in mind. Namely, because polititians won't tell you what the policy is actually for. Instead you get a sales pitch about "helping out homeowners" and other tales. If the point of this policy was to slow down the rate of foreclosurs while the banks where being recapitalized, than perhaps their was an element of success in HAMP. On the other hand, if the recovery depends on home prices falling to levels that will clear the excess inventory in many parts of the country, the program, along with others, is actually prolonging the recovery.
One stated objective of the program was a goal of 3-4 million permanent modifications. Weighing the policy on these grounds, with 435,000 total permanent modifications, it is not looking very good. Ultimately, short selling still remains one of the more realistic options for homeowners. The good news is, for conventional home financing, many lenders will loan two years after the completion of a short sale. While two years feels like a long time, it is certainly not cosmic time.