After helping a fraction of homeowners expected, Obama’s foreclosure prevention program is finally ending

When the Obama administration announced a massive effort to help distressed homeowners in 2009,  it set high expectations. The program, government officials said, would keep up to 4 million borrowers out of foreclosure.

“It will give millions of families resigned to financial ruin a chance to rebuild,” President Obama said at an event announcing the effort. “By bringing down the foreclosure rate, it will help shore up housing prices for everyone.”

Six years later, Obama is preparing to leave office and the Home Affordable Modification Program is scheduled to accept its final applications on Friday having helped a small fraction of the homeowners government officials initially expected. About 1.6 million borrowers have seen their mortgage payments lowered through the program so far, but about a third of those people eventually fell behind on their payments again.

“The president set out an ambitious goal that wasn’t met,” said Kevin Stein, deputy director of the California Reinvestment Coalition, a housing advocacy group. “It was definitely a step forward and step in the right direction, but it didn’t [reach its goal] and a lot of people ended up falling through the cracks.”

HAMP is one of the last remnants of the $700 billion taxpayer bailout effort, known as the Troubled Asset Relief Program or TARP, put in place during the financial crisis. Some of that money, about $28 billion, was carved out to help distressed homeowners by paying banks to lower their interest rates and monthly payments.

It was launched in the midst of one of the deepest housing crises in U.S. history. Millions of people had taken out subprime loans that they could no longer afford, sending foreclosure rates to record levels.

The Obama administration set out to save more homeowners from foreclosure, but the effort has been bedeviled by complaints that banks repeatedly lost homeowners’ paperwork or incorrectly told them that they didn’t qualify for help. The Treasury Department didn’t act quickly enough to force banks to abide by the rules of the program, housing advocates have said. Nearly 70 percent of the homeowners who applied for the program were rejected, according to government data.

A 2014 report examined the record of four large mortgage servicers and found that black and Hispanic borrowers were denied entry into the program at a “significantly higher” rate. “Borrowers in substantially minority areas had at least 3 percent higher denial rates than their comparison populations of borrowers in nonsubstantially minority areas,” according to the Government Accountability Office. “Statistical differences in outcomes among population groups might suggest potential fair lending concerns that merit further examination.”

The banking industry has defended its performance, noting that some of the money it receives through HAMP is passed on to investors and borrowers, who receive incentives for paying their mortgages on time. HAMP was a complicated program, industry executives have said, and it took time to develop a protocol for judging when a borrower should qualify and how much help to give them.

Many of the program’s early problems reflect its complexity, said Justin Wiseman, director of loan administration policy at the Mortgage Bankers Association, an industry group. “It’s incredibly difficult to design a program in the midst of a crisis,” he said. In the end, HAMP “did help millions of homeowners and created awareness” about the availability of loan modifications.

Even critics of the program note that despite falling short of expectations HAMP forced the banking industry to change its approach toward distressed borrowers. Before the program, banks all had different approaches to helping borrowers who were behind on their mortgage payments. Some simply added a homeowners’ overdue amount to their current payments, increasing rather than lowering their payments. Others refused to discuss helping a borrower until they were 90 days delinquent.

“It was really the wild wild West,” Stein said.

The government program lifted industry standards and set common expectations that banks adopted even when operating outside HAMP, said Alys Cohen, staff attorney for the National Consumer Law Center. “Many homeowners got similar types of modifications directly through their mortgage company and those were modeled on the HAMP program,” Cohen said.

About 1 million borrowers have HAMP loan modifications, which typically lower their payments about $500 a month. After being extended three times, the program, which was originally scheduled to expire in 2012, will stop taking applications on Friday.

The program “changed how mortgage servicers handled homeowners in distress; not only by developing a template for loan modifications focused on affordability but also by creating and enforcing standards of care that have been widely adopted by the entire industry,” a Treasury Department spokesman said.

The program was expanded over time to include helping lower how much homeowners owed in some cases, in addition to lowering their payments, and to help people who are unemployed, a Treasury Department official noted. Another part of Obama’s foreclosure prevention effort, the Home Affordable Refinance Program, or HARP, has also been repeatedly extended as it has struggled to reach as many people as initially hoped.

That program allows people who owe more than their home is worth, known as being “underwater,” to refinance into a loan at a lower interest rate. So far, about 3 million homeowners have used that program. The Obama administration initially expected up to 5 million. It is now scheduled to expire in September 2017.

For the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, the chief watchdog of the financial crisis-era bailouts, the end of the HAMP application process doesn’t diminish its worries. Banks will continue to receive billions in incentive payments for helping borrowers who signed up for HAMP for seven years. Wells Fargo, which has received $1.8 billion through the program, is eligible for up to $1.5 billion in bailout funds over the next seven years, for example. JPMorgan and Bank of America, which have received $1.9 billion and $1.4 billion respectively, could receive about $1 billion each over the next few years.

[Taxpayers are still bailing out Wall Street, eight years later]

Many of these banks have repeatedly broken the rules of the program, including kicking homeowners out unfairly or making it too difficult to apply for the help, according to the agency.

“While HAMP did not live up to expectations, the most important thing going forward is to protect from fraud, waste and abuse the nearly one million people with lowered interest rates in the program and the billions of dollars Treasury will continue to pay to mortgage servicers,” said Christy Goldsmith Romero, special inspector general for TARP.

15 Responses

  1. Say whats with no new posts or articles? Has been 2 Or 3 days

  2. 2017 is supposed to be a year of kindness. Hope President Elect Trump would be kind enough to bring new laws to save homeowners. Without having homes for American people to live and sending the children to school, America can never be great. This shame is known world wide now.

  3. Yes, Ronda, Anon seems like a couple of lifetimes ago I got trapped in this. i chose Hammertime when the old Nguyen/Chase came out when it seemed all the blogs were jumping for joy that we would have our day. Now seems like ancient history. But we have more hammers now with Jesinoski and Yvanova.

    Instead of trying to create another big group I focused on specific cases which bring out the blatant fraud and that laws are being ignored and how we are attacked at all levels by agencies, lawyers, courts with deadbeat bias. The goal is to use our specific facts and use web and social media tools as much as possible but as independent as possible from a homeowner perspective. So far doing it w no budget lol and putting in time in between dealing with fires but last couple of weeks show potential.

    Along with putting together “stories” the goal is to collaborate on research etc thinking along the lines of AAA, car/consumer club approach.

    If people can dedicate time, their experience as well as expertise they can either participate as a casual member or help with development. My background is research and real estate/business data which I can apply to property records and policy and hopefully with information side although I’m rusty with current tech but some great tools.

    Goal is to not only put together stories but make sure they get to agencies, elected officials and track them.

    But there has to be a focus on specifics and not turn into a facebook though the system I’m trying out will allow for discussions, private file sharing etc.

  4. To All. I contacted Steve Berman’s office to rerequest legal assistance with my mod fraud case and all I got was an auto reply email that he is out of the office. His firm is handling the clas action in the 10th circuit court of appeals case where BofA is accused of racketeering to cheat borrowers on modifications. Wells Fargo is doing the same thing. I guess one class action settlement would fill pockets for a long time.

  5. Hammertime sounds like a good screen name for a judge. Let’s hammer the crooks
    Fix bayonettes

  6. Ronda is a very smart lady. Hammertime – you have been around a long time. I know. Good idea to put cases together. Would like to work with Ronda, and Hammertime, to help get where we should go. Others — please post your contact, if you can, to tell us your story. Now is the time to work together.

    Happy New Year to all — hope it is a better one.

  7. I am interested in helping develop case strategy to defeat bank mod fraud. Please contact me by email I can help compile evidence and provide my court filing that led to the denial of summary judgement foreclosure.

  8. If $28 billion was carved out to help distressed homeowners and only 1,6 million homes were modified.. what happened to the $28 billlion? Better yet what happened to the $100 million banks got in the bailout? Does anyone have an answe?

  9. HAMP. What a joke. Designed to push the “homeowner” further in debt with the bank’s bs about ” based on investor approval”. And whatever other sorry excuse they think they can get away with. I hope the new generation gets wise to how they can get robbed from these aholes. No wonder home ownership is the worst its been. If Trump doesnt get these wall street investing under control with these big banks, more people will detour from home ownership. The 2008 economic crisis was a setup for the American homeowner to fail and F***ing OBUMA to the rescue. What a maroon as Bugs Bunny woiuld say.

  10. @Ronda working w a small group to develop further putting together sample cases. If interested can contact me here

  11. Agree Starfire, all part of the deception. Can narrow down further to ARMs, negative am loans but no way adds up to trillions deadbeat banks got. SIGTARP is only agency not completely captured warning about insulated CEOS ignoring fraud. And we keep hearing banks whine about “complex” regulations to set up Trump bankster cabinet. Sheeple are gonna get what they wished for.

  12. Starfireblue. You are spot on. My business income went down 40percent when jobs in the community were cut. I applied for a refi before I fell into default. I could no longer finance my income shortage with credit cards. I worked hard all my life and sank all my savings into a business. I needed a modification once the mortgage crisis led the recession. Wells Fargo flat out refused to budge on lowering the interest. They were trying to take my equity when they had just taken billions in the bailout. I kept applying kept getting dragged behind the truck. But I didn’t let go. We went to foreclosure court twice while wells played games to increase the amount of my loan with fees. Always refused to lower the interest rate even when 15 year mortgages were at 2.75%. It has been a gaming system for the bank. Pile on fees and high interest rather than modify and always threaten foreclosure. Hurt em and heal em. The definition of racketeering is to create a problem and then make up a solution that benefits the criminal mob….the bank. It’s the biggest racketeering scheme in history and no one is willing to prosecute.

    I’ve been in court trying to get a modification.
    With an affordable payment. The bank has borrowers over a barrel. They simply deny a modification and pursue foreclosure and make you feel lucky to keep your home with one of the “in-house solutions” with fees and high interest that has never been modified.

    So the judge ruled and denied summary judgement. What next? The new round of foreclosure filings? Who is going to stop the abuse? The massive racketeering? Lil ole me I suppose.

    Please join the fight and pile on the evidence of unfair and deceptive practices in each and every foreclosure filing. Expose the lies because tellingnyour side is. It good enough

    Expose how the banks denied modifications expose how they lied about whether you qualified. Expose the lies in in-house modifications that don’t reveal the truth in lending requirements. Expose the internal memos that reveal a modification was denied because the loan to value was less than 80 percent. Expose how they went after your equity when you faced hardships and needed a modification. Expose lies on subordination aff agreements where they inflate the amount of your loan to second mortgage holders to cut them out of a foreclosure sale. The banks are full of lies and you must go into court and show lie after lie after lie. The bank profits by lying

  13. There may have been sub-prime loans that were made, but most of the people I know who are facing foreclosure, including myself, were NOT sub-prime borrowers. If the borrower could not afford to pay the monthly amount, those foreclosures would show up very quickly. All of the people I know who are being foreclosed upon had their mortgages for years and their problems began when these same criminal banks wrecked the economy and millions lost their jobs.

    Unemployment was the problem and that was caused by the meltdown. The “sub-prime” meme was rolled out to make it seem that the foreclosures were all the fault of borrowers who could never have afforded monthly payments and should have never taken out loans. Most of us had to put down hefty deposits before securing a loan. The majority of sub-prime borrowers could have never done that. The sub-prime reason is mainly a crock that has been repeated over and over to mitigate the Bankster’s illegal actions.

    It is very difficult to make payments when you don’t have a job. Many homeowners were paying their mortgages for years, that is until they lost their businesses or jobs. Whose fault was that?

  14. In my humble experience and research none of this is a surprise. After all, our very own government GSE took over Fannie and Freddie back in 2008 and they are just as corrupt and part of the giant racketeering scam that the 10th Circuit Court in Colorado just ruled on back on August 15, 2016. Since it is our very own government that is in cahoots with nasty old Bank of America and ALL it’s co-conspirators INCLUDING FANNIE MAE (WHO DOES NOT DISCLOSE IN ANY WAY THAT THEY HAVE BEEN GSE SINCE 2008 WE CAN ONLY SURMISE THAT THEY ARE ALL A BUNCH OF CROOKS. Really sad because all of our other government agencies do their best to insure that the government continues with this giant scam and wrongfully foreclosing upon thousands, if not millions, of property owners and no one willing to challenge and defend us. I was really surprised at the 10th circuit court ruling here in colorado, but am sure they will find a way to put the breaks on that and i sure would not trust the lawfirm that is allegedly working on behalf of the class action.

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