Borrowers to See Mort Payment Spikes with HAMP Expiring

[Corey Dutton]

The U.S. Government’s HAMP Program (Home Affordable Modification Program) is about to expire. Over $1 MM homeowners were able to take advantage of this program in 2009, which provided a sharp drop in the interest rates on their loans. But with the HAMP program about to expire, these homeowners will see their interest rates rising every year with an average of $200 increase in monthly payment. For homeowners in California, for example, mortgage payments could increase by up to $1,000 per month.

And with tighter federally imposed regulations on mortgage lenders that went effective January 10, 2014, how will these people refinance these loans ? For many of these borrowers, refinancing their existing loans is simply not possible. And for those who still owe more on these homes than they are worth, selling is also not an option.

With banks tightening the screws even tighter on mortgage lending this year due to increased regulations, seems like perfect timing for the HAMP Program to expire. I imagine the government thought that the timing would be perfect and banks would be readily lending again by the time the program would expire. But the opposite is true. The CFPB (Consumer Financial Protection Bureau) came way too late to the, “let’s punish the mortgage industry party.” With new rules in effect this year that are now defining a “qualified mortgage,” to the mortgage industry, even the best credit borrowers won’t qualify for a mortgage loan in 2014. Once again the unintended consequences of too much government meddling in the mortgage market. As the HAMP Program begins to expire, and thanks to new government regulations, now no one can qualify for a mortgage? What is your opinion on this topic? Please share your comments below.

Posted by Corey Curwick Dutton