$22B Still Unclaimed in Government Mortgage Relief

Nearly $22 billion remains available to help struggling home owners reduce their monthly mortgage payments and avoid foreclosure through the government’s Making Home Affordable program, according to a quarterly report by the special inspector general for the Troubled Asset Relief Program. TARP has only spent $12.8 billion to date of the $45.6 billion in funds it’s been allocated for housing programs. An additional $3.4 billion is still available for the Hardest Hit Funds Program as well.

The “Treasury should improve coordination between these programs so that they work together as seamlessly as possible to provide effective, sustainable mortgage relief to as many struggling home owners as possible,” the report states.

HAMP has suffered from low participation. Only 1 in 6 home owners who have applied for HAMP have received a permanent loan modification, according to the report. The program has had a high redefaulting rate. To date, 389,222 home owners who have participated in HAMP have not been able to keep up with their new modified mortgage payments. Twenty-nine percent of home owners who qualified for HAMP have had to drop out of the program.

Many home owners are soon set for an increase in their rate. After five years, the rate on HAMP loans rises 1 percent until reaching its previous rate prior to the loan modification.

Source: “$22B in Government Mortgage Relief Still Left for Struggling Homeowners,” Housingwire (July 30, 2014)

Struggling Home Owners “Opt for Short Sales”

Short sales surged in 2012 to a level that was nearly triple the amount of foreclosures, according to recent data from RealtyTrac. 

Foreclosure sales made up 11 percent of all transactions last year while short sales made up 32 percent, Short sales surged .  

“We’re seeing fewer of the most disruptive sales, the [bank-owned foreclosures], hitting the market but there are still a lot of distressed property sales,” says Daren Blomquist, spokesman for RealtyTrac. “They’re shifting to short sales.”

The increase in short sales is helping to give a boost to distressed home prices too. In the fourth quarter, foreclosure or bank-owned homes sold for an average of $171,704, a 4 percent rise from a year earlier, RealtyTrac reports. 

Source: “Struggling Home Owners Turned to Short Sales in 2012,” CNNMoney (Feb. 28, 2012)