The Obama administration — in addition to announcing a new mortgage refinancing program, paid for by implementing a tax on the nation’s biggest banks — has introduced another round of fixes for its signature foreclosure prevention program, the Home Affordable Modification Program (HAMP). HAMP has fallen woefully short of expectations, due to a combination of design flaws, bank intransigence, and a significant amount of bank incompetence.
The new HAMP features include expanding the debt-to-income requirements for participation, paying investors more for principal reductions, and extending the program’s application deadline through 2013. According to an analysis from JP Morgan Chase, the changes should aid 500,000 homeowners:
A recent expansion of the Home Affordable Modification Program is expected to result in 500,000 mortgage modifications that otherwise would not have taken place, bank analysts said…JPMorgan Chase [[JPM]] analysts said in a report Monday they expect 1.7 million additional borrowers could qualify for the program under the more lenient DTI requirements – meaning more of their debt not just their first lien mortgage would be calculated in.
The administration’s housing programs have reached just 20 percent of the households they were supposed to, with HAMP helping 910,000 homeowners, far short of the 4 million at which it was aimed. Just a fraction of the money allocated to the program has even been spent.
“The housing crisis has been the single biggest drag on our recovery from the recession,” Obama said in his latest weekly address. “It has kept millions of families in debt and unable to spend, and it has left hundreds of thousands of construction workers out of a job.” Today, the economics bloggers at Calculated Risk predicted that the housing market it at its bottom, while “the list of housing markets showing measurable improvement expanded by 29 metros in February to 98 on the National Association of Home Builders/First American Improving Markets Index released on Monday.”
Hopefully these numbers, as well as renewed interest from the administration in aiding troubled homeowners will result in housing going from a drag on the economy to a boost.