HAMP and Another Short Sale Disaster

New numbers were published by the government a few weeks back with regard to HAMP, the government's loan modification program. And I was surprised they would release the numbers! Any one who has tried to obtain a loan modification, this might not be too big of a surprise, until you find out how much the government has paid out.

Since the program started earlier this year over 3.1 million have applied for a short sale and the lender has requested initial documents to process. Out of 3.1 million people only 31,000 have received a permanent loan modification, that's only 1% and well short of the 4 million people our government promised to help!!!! While, lenders and the government guidelines are to blame, it's not all their fault. There are a lot of people that don't send in the paper work or are just plain tired of the headache tying to obtain loan modification and give up.

As I have said in the past, if you don't have professionals helping the public, the success rate of any loan modification program will be low. There is just too much paper work and too much to know for the average American to handle.

Now here is the real kicker. For helping 31,000 Americans lower the mortgage payments lenders have received over $27 BILLION in incentives from the government. $27 BILLION!!!! ARE YOU KIDDING ME!!! If the government would have paid off mortgages of $200,000, they could helped 135,000 home owners pay their mortgage IN FULL!!!!

HAMP has become another bank bail out, with out all the bad press that TARP received. This is amazing, that we would pay $27 BILLION to lenders to help on 31,000 people. And now the government has not only created a similar program for short sales, they have also increase the HAMP funds to $50 BILLION.

The bottom line is, that lenders are getting RICH without providing any service or product, and we are paying for it. The loan modification and short sales that we are paying for, lenders would have done regardless of a government incentive program, as it SAVES them money. And I have heard countless stories and worked on loan modifications for friends that qualify for HAMP and are being denied for no reason, except that they don't help the bottom line of the lender.

If you are working on a loan modification, good luck and hopefully it's the lenders financial best interest.