Shortly after I first started writing about HAMP, I had an email exchange with a housing counselor who said I was being too harsh on the program, that borrowers in trouble had no recourse, and that I basically didn’t understand the pressure these homeowners were under. The dozens of emails I was getting from all around the country from borrowers, all of whom almost without exception were saying that HAMP was making their problem more intractable, differed with this counselor. And now, a year later, apparently the great majority of housing counselors disagree as well.
More than three-fourths of housing counselors responding to a survey conducted by the Government Accountability Office said borrowers hold a “negative” or “very negative” experience with the Home Affordable Modification Program.
The GAO received 500 responses to its October 2010 survey of roughly 130 housing agencies regarding HAMP. Nearly 400 responded to the question about how the borrowers they worked with felt about the program. Only 9% of the counselors said borrowers had a “positive” experience, according to the GAO report released Thursday.
The Treasury Department expressed concern in the GAO report about the lag time between the survey and current HAMP performance, but admitted some of the problems counselors brought to light still linger.
In other words, nice try Treasury, but your program still sucks.
In fact, at this point, I hasten to call it a program. The poor word of mouth, from both borrowers and now housing counselors, has slowed new applications to a crawl. HAMP has basically topped out on its “help” for homeowners. That’s probably good news for homeowners.
Treasury did make one improvement this week. They implemented a Net Present Value calculator (also available here). The net present value is the test that’s supposed to be used by servicers to determine eligibility for HAMP, by looking at the total income of a household and whether they can support a mortgage payment with a modification. The calculator runs the test for homeowners based on their records. So if you don’t qualify, you can find that out before wasting your time and making a bad decision on a HAMP trial modification. If you do qualify and the bank still turns you down, you have empirical evidence that contradicts them. It’s generally a good idea. And this builds on the single point of contact requirement Treasury added to HAMP this month.
But these would have been better ideas at the outset, so hundreds of thousands of borrowers wouldn’t have walked into the HAMP trap. And the credibility is so damaged now, that the program is just no longer useful.
…Incidentally, in that GAO report, the number one way cited for Treasury to improve HAMP is for them to actually enforce sanctions on noncompliant servicers. Two years into the program, there has not been one sanction enforced. 60% of housing counselors said that was an urgent priority.