More foreclosure-avoidance incentives were announced this week:
http://www.mortgagenewsdaily.com/12052014_hamp_mfa_programs.asp
An excerpt:
“While the housing sector has strengthened in recent years, there are still many homeowners struggling to make their mortgage payments,” said Secretary of the Treasury Jacob J. Lew. “The changes we are announcing today offer meaningful incentives for borrowers to stay current in their modifications, increase their opportunity to build equity in their homes, and provide vital safety nets for those facing greater financial strains.”
The Home Affordable Modification Program (HAMP), established in 2009, offers homeowners loan modifications with lower monthly payments achieved through lowered interest rates and modified loan terms. Many homeowners with HAMP modifications have been eligible to earn up to $5,000 if they adhere to modification terms for five years. The amount is applied to their outstanding principal balance.
Under the revisions an additional $5,000 will be available to homeowners after a sixth year of on-time payments and they will then have the opportunity to re-amortize the reduced mortgage balance, thus further lowering their monthly payment. HUD/Treasury estimate some one million borrowers with HAMP modifications may be eligible for the new incentive.
HAMP Tier 2 was developed as an alternative for homeowners who can’t qualify or are unable to sustain a HAMP Tier 1 modifications. It provides modifications with a low fixed rate for the life of the loan. The revision announced this week will include reducing the interest rate for these modified loans by 50 basis points which will also make more borrowers eligible for the program. It also extends the sixth year $5,000 pay-for-performance incentive to Tier Two borrowers.
$5,000 paid for doing what you’re supposed to do…
And here I used to say it was a bad idea to pay your kids to get “A’s” on their report cards…
They must have a lot of money laying around.
First you get a loan mod that lowers your payments. Make those on time for five years and get $5,000 knocked off your balance.
Then the new incentive knocks another $5,000 off the balance after only one more year, and re-amortizes the balance (again) to reflect even lower payments. If you are in Tier 2, then knock off another half-percent off your 30-year fixed rate too. Without even asking for it!
Cant imagine this will make any difference around here. But in many parts of the country where $200K or less buys you a nice home this could be a lifeline for decent people doing their best to survive. I don’t think they would be offering this if it didn’t make sense for the investors to do so. They have orchestrated a brilliant soft landing (relatively speaking to what could have been). I say have at it.
Mannix Said:
“But in many parts of the country where $200K or less buys you a nice home this could be a lifeline for decent people doing their best to survive.”
Being “decent” is irrelevant. What’s relevant is fulfilling the agreement to pay a respecified amount as noted in the contract they signed. Contract law a basic tenet that has always distinguished America from the rest of the relatively uncivilized world. When contract law dies, the thugs come out of the woodwork.
Speaking of which, I take issue with how free and easy you are with other people’s money. If you think helping “decent” people pay their mortgages is a good idea, start with your bank account, not your neighbors. Forcing people to pay (increased taxes) for someone else’s mistake at the point of a gun, is rude. If you don’t believe me, ask Miss Manners.
It must be easier to live without a soul. We are blessed and fortunate to have what we do. As for the contract, it says pay this amount or we (the bank) have the right to take the security (the house) back. They also have the right to do other things that result in a better outcome like modify the agreement. If they are modifying them its because it results in a better outcome for them not out of charity.
Speaking of which we are already doling out much more to folks in need. Have you ever seen a tax return for a single mom in the US making about $20K? Not only dont they pay taxes but they get thousands of dollars in credits. Im OK with that.
And yes I do already give freely to others in need myself. ALways have.
And yes I do give freely to help others
Wow, Mannix, it seems you struck a little nerve with daytrip. I fully understand daytrip’s point of view, but I would hazard to guess that the “powers that be” ran the numbers and figured that handing out these relative crumbs from the table was necessary to stave off even greater and deeper harm to the over-all economy. And when I say “powers that be” we all know it is not the government or elected officials that are making any of these decisions. I think you could add up all HAMP or HARP or whatever money that has been or will be doled out and it is a small drop in the perverbial piss bucket when compared to the cash that flows to institutions right out of our pockets.
And for point of clarification, contract law in our system as it has always existed permits default, in fact encourages it when it makes economic sense, since there is recourse available to the non-defaulting party by way of damages (which is why there is no specific performance in situations where money damages can make one whole). Sure, the perversion is that we live in a non-recourse state which means you could just walk if you wanted to anyway. But that is a well known rule of the game that the banks voluntarily decided to play for profit, and if they were true bankers, would have priced that risk in to the price of the product they were selling.
It is fine if we really are helping people that need the help … but we saw plenty of examples during the crash that a lot of this help/money was going to people that were scamming or taking advantage of the system. Unfortunately the system doesn’t seem to be able to, or want to, separate those 2 groups.
When banks give out $5K prize for people doing what they’re supposed to do, either taxpayers or banking customers pay for it. Paying people for simply honoring a contract supports collective neurosis, much like holding a cap and gown graduation ceremonies for second grade children is a type of collective neurosis.
I am not as cynical as some here. I don’t support awards based on low expectations. I think it weakens a society, and foments a social/political undertow of low grade chaos, as we’ve seen during the housing crises, as well as the stock market crisis of 2001.
Although we can’t eliminate mass pathological behavior, humans being humans, we can certainly speak out against it when we see it, and legislate against it when we can. Roosevelt did so after the stock market crash of 1929, and his legislation worked great for the stock market for a long time.
The growing “I deserve it because I’m me” mentality. isn’t exclusive to americans, but I’ve noticed those countries that fall into it don’t have happy endings.
In any case, these are philosophical and character issues that go beyond the intention of this site, so I’ll just leave it at that.