HAMP: How Successful Was It?

The Home Affordable Modification Program, or HAMP, was designed by the Obama Administration in 2009. Its goal was to assist struggling homeowners by encouraging lenders through incentives to lower mortgage interest payments or by extending the terms of their loans. Roughly 2.7 million homeowners applied for the program, yet only around 25 percent of those applicants succeeded in having their mortgage payments restructured.

Because of strict eligibility requirements, which were more onerous than loan modification programs offered by individual lenders and banks — not to mention the real, substantial help that law firms and attorneys can provide in handling loan modifications — and because only $1 billion of the needed $75 billion was allocated to the program, HAMP was criticized from the start.

Some 260,000 applicants were rejected from the program after either failing to submit required paperwork or after submitting documents that were "lost" by the mortgage companies. Another 255,000 applicants failed to qualify because their mortgages were considered affordable under the HAMP guidelines. Others were rejected because they had loans exceeding $750,000 or were not considered in danger of imminent default.

About 770,000 applicants who managed to start the program were later disqualified for supposed failure to provide proper documentation or for not meeting eligibility criteria noted above. Although homeowners in New England and in some western states experienced less trouble with the program than those in southern states, the states' rejection rate was still 72 percent.

Many homeowners who were disqualified after being initially approved for a trial modification of their mortgages claimed they were misled by lenders who, they contend, never had any intention of permanently approving their modified loans.

And this, we contend, is closer to the truth than anything else.

Many lenders canceled loans at the end of the trial period and demanded back payments on the original mortgage terms. As it turns out, lenders make more money doing foreclosures than in keeping people in their homes.

Housing experts forecast that about 3.6 million more foreclosures are expected through 2013.