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58 DS News Government Progress Report (Program) DS News Housing Score D MISSION » HAMP was launched in 2009 under the guidance of the Department of Treasury to assist homeowners facing foreclosure. The program was intended to lower monthly mortgage payments. » This program was originally designed to help home- owners struggling to keep up with their mortgage payments, reduce their payments, and bring their mortgage payments in line with their budget. » It was intended that the program would assist home- owners with recent hardships such as job or income loss, medical issues, or other catastrophic events, and homeowners with adjustable-rate mortgages with payments that had increased to amounts no longer affordable. » Requirements were that the home must be a primary residence, loan was signed before January 1, 2009, and that monthly mortgage payments exceeded 31 percent of the homeowner's gross monthly income. SUCCESSES » HAMP has not lived up to expectations. Originally, the program was designed to aid 3 to 4 million home- owners, but as of November 2013, only about 1.3 mil- lion borrowers had entered into a HAMP permanent modification program, according to a February 2014 report from the Government Accountability Office. However, in a late 2013 report, Treasury stated it had helped 1.5 million homes through HAMP. The idea behind it was to give banks incentives to refinance mortgages that were under water. » Loans modified under the HAMP program have a lifespan of five (5) years, which means by the middle of 2014, mortgage payments for homeowners with the earliest of the HAMP modifications will rise. After enjoying five years of lower payments, interest rates on HAMP loans are raised by 1 percent annually until the rate reaches the level of the current market inter- est rate for a 30-year conforming fixed-rate mortgage at the time the loan was originally modified. Most of HAMP modifications (95 percent) were achieved by initially slashing the interest rate, some as low as 2 percent. » Since HAMP began in 2009, there have been 2,173,922 trial HAMP mods, with 1,339,742 (62 percent) converted to permanent status, 375,071 (28 percent) disqualified from the » program, and 25,663 HAMP loans paid off in full. Presently, there are 939,008 active permanent modifications. OPPORTUNITIES/ISSUES » HAMP has been criticized because of its selectiv- ity. Many borrowers do not meet the program's prerequisites and lenders have complained that HAMP regulations forced them to hire additional staff members who were not really needed. Some lenders say they were not allowed to modify many of the existing loans they'd written. » HAMP was created as part of the Troubled Asset Relief Program or TARP which bailed out financial institutions after the crash in 2008. Neil Barofsky, special Inspector General for TARP, described HAMP as "anemic" and criticized Treasury for not establish- ing meaningful targets for the program. He was also concerned that it would open the door to fraudulent foreclosure rescue schemes in which large upfront fees could be extracted from desperate borrowers. » In addition, Barofsky said that Treasury failed to ensure that servicers had the necessary infrastruc- ture to support a massive mortgage modification program. It barely got off the ground, and few home- owners have received the help they hoped for. » However, stories have surfaced from people working in refinance services at large banks, saying that the banks really did not want to offer refinancing and sabotaged the program by stalling borrowers with repeated requests for paperwork and incorrect income calculations. » Treasury data shows that the second largest U.S. lender canceled more trial modifications than any mortgage firm and sent 33 percent of canceled HAMP trials into foreclosure. 2.1 million total HAMP trial modifications (through April 2014) 1.3 million permanent HAMP modifications started (through April 2014) 1.4 million permanent modifications completed (through May 2014) Roughly 950,000 active permanent modifications (through April 2014) Approximately 45,000 active HAMP trial modifications (through April 2014) Home Affordable Modification Program Overseen by the Federal Housing Finance Agency (HAMP) | CORPORATE HEADQUARTERS: Washington, D.C. 2.1 MILLION 1.3 MILLION 1.4 MILLION 950,000 45,000

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