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Changes planned for federal foreclosure prevention program

Foreclosures have become an increasingly major issue in the U.S. in recent years. In the past few years, the federal government has tried many different ways to address foreclosure issues.

Recently, the Obama administration announced that it would be making some changes to a federal foreclosure prevention program. The program in question is the Home Affordable Modification Program (HAMP). The program is aimed at helping struggling homeowners to get loan modifications to help them avoid foreclosure. Reportedly, up to this point, many have seen the program as having been a failure.

The changes the Obama administration recently announced that it would be making to the program appear to be aimed at expanding the program's reach and providing greater incentives for lending services to include principle write-downs in loan modifications under the program. The changes to the program reportedly will include:

  • Changing the program's eligibility requirements to allow homeowners who are struggling with mortgage payments because of high amounts of other debt to be eligible for the program.
  • Changing the program's eligibility requirements to allow mortgages on rental properties to be eligible for modification under the program.
  • Tripling the incentives that lending services can receive for writing down mortgage principles as part of loan modifications under the program.

According to the Palm Beach Post article which reported this story, the Obama administration plans to have the changes to HAMP that it has announced implemented by May of this year.

It will be interesting to see if the planned changes to HAMP will have any significant impacts on the program's effectiveness. It will also be interesting to see what impacts these planned changes to HAMP will have on homeowners.

Source: The Palm Beach Post, "U.S. loosens mortgage aid requirements," Kimberly Miller, Jan. 27, 2012

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