The Wall Street Journal in a recent article concluded that the HAMP program is a failure because many homeowners who got mortgage modifications re-defaulted on their home loans. In addition, the publication took the government-sponsored program to task for failing to provide relief to the initially-estimated three to four million homeowners. In fact, only 521,630 homeowners have been awarded permanent HAMP mortgage modifications since the program began in spring 2009. This has led some Republican lawmakers to call for the abolishment of the program that they call a "colossal failure."

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Is HAMP-fail the fault of the program? Or the loan servicers?

Critics like Elizabeth Warren, who is heading up the newly-formed Consumer Protection Financial Bureau, lay a lot of the blame at the door of mortgage servicers. While mortgage modification is surely in the best interest of the homeowners and probably produces the best outcome for the mortgage investors as well, mortgage servicers who collect payments from borrowers make a lot more by foreclosing on homeowners than they do from mortgage modifications -- about ten times as much, in fact. So there is probably a reason that has nothing to do with incompetence that homeowners' HAMP applications and paperwork disappear into a black hole or the Great Inbox in the Sky or the landfills that become the final resting place of documents everywhere...

Non-HAMP fail

Lenders like to point out that while HAMP only resulted in about half a million modifications, they managed privately and on their own to effect two million modifications. But does that make HAMP a failure and private lenders four times better? Not really. Many feel that the only reason private modifications were ever offered is that lenders were pressured by the existence of HAMP. In addition, non-HAMP mortgage modifications failed at a much higher rate than HAMP mods, because the terms of private mods were much less generous and provided much less relief to borrowers.

States stepping up

Another reason that private mortgage modifications are on the increase is that about twenty states don't allow foreclosure without requiring lenders to enter into a foreclosure mediation program to hammer out a settlement if possible, according to the Center for American Progress.

If your lender is jerking you around, your state government may help

The next post on this blog deals with state-sponsored foreclosure mediation programs that may force your lender to the table and get you some relief. The important thing, whether you are trying for HAMP or trying to stay off the homeless roles, is that you persevere.