HAMP Deadline Extended to Help More Homeowners

May 06, 2012 at 2:32 PM

As promised in the State of the Union address, the Obama administration announced on Friday it would significantly broaden the pool of persons eligible for mortgage modifications to owners of rental properties and homeowners with medical, credit card bills, and second mortgages.

With HAMP (Home Affordable Modification Program) investors were included in the ability to refinance because the foreclosed rental properties were having a detrimental effect on low and moderate-income renters. “The whole purpose of HAMP is to try and prevent foreclosures,” said Treasury Assistant Secretary Tim Massad in a conference call with reporters Friday afternoon. He also said that this would affect roughly 700,000 rental properties nationally.

Federal officials said that HAMP will begin to evaluate borrowers who were previously ineligible for mortgage modifications because their debt-to-income ratio on their first mortgages was below 31 percent. HAMP was previously set to expire in December, now is extended to December 31, 2013. There will be no additional cost to taxpayers for the expanded program. It will be funded by the $29 billion already set aside for mortgage modification efforts.

Officials have declined Friday to estimate how many additional homeowners would be helped as a result of the program changes, because HAMP has been previously criticized of falling short of helping 3 to 4 million homeowners as promised.

Writing down mortgage balances have been long sought by consumers, who question why they continue to pay mortgages on properties when there is little chance of regaining any equity in their homes due to the housing crash. Homeowners “shouldn’t have to sit and wait for the housing market to hit bottom” before finding some relief, said Shaun Donovan, current secretary of the U.S. Department of Housing and Urban Development.