US Housing Program Grows Slightly As Obama Plans Housing Revamp
3:00p ET February 6, 2012 (Dow Jones)
US Housing Program Grows Slightly As Obama Plans Housing Revamp
By Alan Zibel
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The number of U.S. homeowners helped by the Obama administration's flagship mortgage assistance program inched up in December, as the government kicks off a push to retool its housing-assistance efforts.
Treasury Department statistics released Monday showed the government's Home Affordable Modification program have helped nearly 763,000 U.S. homeowners avoid losing their homes through permanent loan modifications as of December, up from around 751,000 in November.
The HAMP program was announced in early 2009 as a way to aid homeowners struggling in the wake of the housing bust. The government pays lenders incentives to help borrowers avoid foreclosure by reducing their mortgage payments.
Nearly 1.8 million homeowners have started the program since its launch, but many didn't qualify for the program after an initial trial phase. Others were unable to make payments, even at lower levels, and dropped out.
The administration initially projected that between 3 million and 4 million borrowers would be helped. But President Barack Obama acknowledged in a speech last week that "the programs that we put forward haven't worked at the scale that we hoped."
As a result, the administration has been working on revamping its housing initiatives. Last month, the administration said it would give troubled homeowners an additional year to enroll in the HAMP program and increase payments to banks in an effort to get them to reduce more borrowers' loan balances.
Administration officials estimate that about 1 million additional homeowners would be eligible with changes that include making the program available to people who rent out their homes and relaxing some other qualification rules.
Those changes "will bring further assistance to homeowners, renters and their communities," said Tim Massad, an assistant Treasury secretary, in a prepared statement. The HAMP program had been set to expire at the end of this year, but will now extend through 2013.
HAMP seeks to reduce borrowers' monthly payments to make them affordable, typically by extending the loan term and lowering the interest rate.
But officials are pushing harder for banks to reduce loan balances. They are tripling the amount of taxpayer money that investors receive when they reduce loan balances.
However, government-controlled mortgage-finance companies Fannie Mae (FNMA) and Freddie Mac (FMCC) and their regulator have resisted reducing principal balances, arguing that doing so is too costly. As a result, only about 40,000 of borrowers currently enrolled in HAMP have had their loan balances reduced, the Treasury report said.
-By Alan Zibel, Dow Jones Newswires; 202-862-9263; alan.zibel@dowjones.com
(END) Dow Jones Newswires
02-06-12 1500ET
Copyright (c) 2012 Dow Jones & Company, Inc.BT201202060062982012-02-06 20:00:00.00042JMGIB1RE3T1SJF4BDF3AAM4DDJNF
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