In general, the program is designed to help stabilize housing prices, prevent foreclosure and improve market health as a whole. In particular, the program is set to offer assistance to two major groups of American homeowners. The first one includes four to five million homeowners whose house values have dropped and are now making payments that are higher than they are worth. The second group includes three to four million homeowners whose mortgage rates have increased and are in danger of foreclosure.
Both groups face difficult challenges. The second group however is considerably at a disadvantage. It is possible that payments are now harder to make because of rising unemployment rates and a generally difficult economic climate.
The program depends much on the participation of banks and other concerned financial establishments. The first phase of the program called for lenders to willingly lower mortgage rates. Once sufficiently lowered, government can share in the cost of driving rates even lower.
As expected, critics had been lukewarm at the initial program launch, pointing the impossibility of helping all homeowners struggling under the shadow of possible foreclosure. Moreover, there was a looming question on whether banks would agree to the principle behind the program.
Obama officials admit that there are program limitations but stress that the main program beneficiaries are responsible homeowners. Roughly speaking, that would include homeowners who stay current on their mortgage payments. In other words, help will be limited but since it is limited to responsible payers, there is no reason for lenders not to agree.
People who fall under the first category of homeowners can now look forward to refinancing to take advantage of lower mortgage rates under the Home Affordable Refinance Program (HARP). Homeowners who fall under the second category can benefit from mortgage loan modification through the Home Affordable Modification Program (HAMP). The HAMP alone is worth $75 billion which is why it is worth asking whether the program is making headway.
Official reports have been flattering. A month after the launch, the administration, bank regulators and key government agencies began work on HAMP guidelines. At about the same time, government renewed its commitment to finance Fannie May and Freddie Mac. In the following two months, guidelines too were issued regarding the Second Lien Program and the Foreclosure Alternatives Program
Last month, the government announced having been able to sign up 45 servicers to HAMP, putting 85% of loans under the program. To date, 360,000 trial modifications have been started. Standard guidelines have obviously increased the number of loan modifications across the country. Even Arizona Mansions ( http://www.arizonamansions.org ) are coming down dramatically in price
The government is undeniably trumpeting the gradual success of MHA and HAMP. This does not mean though that the number of foreclosures is bound to significantly decrease. Some homeowners may not be qualified for the program while others may willingly opt not to apply. In any case, some homeowners are still expected to benefit from it.
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