Many people in Las Vegas are either underwater in their mortgages or are just having a bad go of things making the payments. Soon after the housing bust, the federal government stepped in to help beleaguered homeowners with two forms of aid that have not been as effective as they were purported to be: the Home Affordable Modification Program and the settlement the government reached with banks. According to a recent large joint study conducted by the Federal Reserve Bank of Chicago, the Office of the Comptroller of the Currency, Ohio State University, the University of Chicago, and the Columbia Business School, according to an article in MSN Money. Here are six results of the study that indicate that talking to a Las Vegas bankruptcy lawyer is a better option than waiting for the government to come up with a one-size-fits-all solution to the mortgage and foreclosure crises.
- The headline grabber: Banks’ incompetence may have failed to prevent 800,000 foreclosures that could have been prevented with HAMP modifications. Most of the blame is attributed to larger banks, which were less efficient in enacting modifications and which, unfortunately, are the servicers for the vast majority of banks in the United States.
- Perhaps another 800,000 mortgages were successfully modified and prevented foreclosures, but another 400,000 were modified and did not.
- Although HAMP modified 1.2 million mortgages, the government hoped it would have modified between three and four million. Such a large shortfall suggests that had the government created a more effective program, fewer Americans households would have faced foreclosure.
- According to a quote from Bloomberg Businessweek, “The program [HAMP] also had no effect on consumer spending — no extra bump in auto loans, home prices, lower credit card delinquencies, or other ancillary benefits.” Had any of this occurred, more Americans would have spent more money, which would’ve kept other Americans employed, reducing the damage of the recession.
- Much of the money—an unknown amount—remains unspent. That figure could be in the tens of billions of dollars.
- As for the $26 billion settlement between the banks and federal and state governments, it too has reportedly failed to prevent foreclosures and keep people in their homes. Instead of using the money to help homeowners with principal write-downs, banks are using it for short sales, which aren’t as bad as a formal foreclosure but certainly don’t keep people in their homes.
If you are underwater in your mortgage or are having trouble making your monthly payments, a HAMP modification might help, and short sales are usually an option, but talking to a Las Vegas bankruptcy lawyer is still a wise move. Filing bankruptcy triggers an automatic stay that prevents foreclosure, and filing in Chapter 7 and then Chapter 13 can help you discharge and subsequently strip underwater second mortgages.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.