mortgage payments that are affordable and sustainable over the long term. HAMP was designed to help families struggling to remain in their homes and show documented financial hardship and a chance make payments on their mortgage each month after a modification. According to treasury.gov, HAMP is a voluntary program that supports servicers’ efforts to modify mortgages, while protecting taxpayers’ interests. To protect taxpayers, MHA housing initiatives have pay ‐ for ‐ success incentives. This means that funds are spent only when transactions are completed and only as long as those contracts remain in place. Therefore, funds will be disbursed over many years. HAMP works by encouraging participating mortgage servicers to modify mortgages so struggling homeowners can have lower monthly payments and avoid foreclosure. It has specific eligibility requirements for homeowners and includes strict guidelines for servicers. The program includes incentives for homeowners, servicers, and investors to encourage successful mortgage modifications. Families in this program typically reduce their monthly payments by a median of more than $530 each month. But the program’s impact goes even further. HAMP has also encouraged private lenders to modify mortgages at no expense to taxpayers. When the housing crisis began, the mortgage industry was ill- equipped to respond adequately. Mortgage servicers had insufficient resources to address the needs of a market reeling from increasing foreclosures. In addition, their servicing expertise and infrastructure was limited to overseeing collections and foreclosing on those who failed to pay. They did not have the systems, staffing, operational capacity, or incentives to engage with homeowners on a large scale and offer meaningful relief from unaffordable mortgages.
72
Powered by FlippingBook