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Mortgage relief program ills point to owners' high debt levels

A cursory look at the central findings in a recent government report on a program established several years ago to help beleaguered home owners with their mortgages suggests that the predominant -- if not sole -- theme relates to foreclosure.

A closer look reveals that it also relates to -- and in a fundamental and most immediate sense -- the unsustainable debt level that many Americans are saddled with generally that adversely impacts on their ability to participate successfully in the federal mortgage initiative.

The program is called the Home Affordable Modification Program (HAMP), which the government made available four years ago to millions of homeowners nationally, including in Florida, facing potential or imminent foreclosure.

A report just issued by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) indicates that HAMP has been an unqualified failure for more one quarter of the 1.2 million home owners it has helped to refinance their mortgages.

“Treasury needs to research why so many borrowers are dropping out of the program,” SIGTARP head Christy Romero bluntly says.

Study findings from Romero’s own organization already go far toward explaining the lack of relief many mortgagees have experienced through working with HAMP. What has been centrally noted is that the program’s default rate is linked especially closely with borrowers who already had high debt obligations overall when they inked their mortgage modifications.

In other words, many of them simply couldn’t dig out of a deep financial hole that was created by more than mortgage-related problems alone.

In fact, millions of persons are underwater from many and diverse sources of debt, including medical debt, student loan obligations and credit card liabilities. Continuing payment on these, if substantial, has an obvious and deleterious effect on a borrower’s ability to satisfactorily negotiate a government mortgage re-modification program, regardless of its terms.

In many cases, the debt relief required to help an individual or family make real progress in their financial affairs requires dealing directly with these various sources of debt.

Assistance from a proven bankruptcy attorney can be instrumental in achieving that goal.

Source: CNN Money, "Borrowers in Obama housing program re-defaulting, watchdog says," Les Christie, Juy 24, 2013

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