$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)

“Troubled Asset Relief Program” is Falling Short!

A “hardest hit” fund to help 18 states that were most battered in the mortgage crisis isn’t meeting its goals of helping underwater home owners, according to a report by the Special Inspector General for the Troubled Asset Relief Program (TARP).

Three percent of the $7.6 billion in the Hardest Hit Housing program has been used by the states since Dec. 31, 2011, but most of those funds so far have gone to help the unemployed and not underwater home owners, according to the report.

According to the report, more than 75 percent of the funds have gone toward shoring up states’ unemployment programs, such as by paying the mortgages of unemployed home owners. But the money was supposed to also be used for loan modifications and principal reductions to help underwater home owners as well, the report says.

The 18 states participating in the hardest hit program were selected due to having the highest number of home owners in negative equity and unemployed.

The Treasury department maintains the fund is serving its purpose. The program provides states the ability to “leverage their unique understanding of the conditions in their communities to create effective, locally-tailored programs,” Timothy Massad, assistant secretary for financial stability, wrote in a letter to Romero about the fund.

Source: “Watchdog Blasts Housing Program for ‘Hardest Hit,’” CNNMoney (4/12/12)