In the 2012 State of the Union address, President Barack Obama claimed he was interested in exploring ways of helping America’s underwater homeowners, that is, homeowners who owe more on their mortgages than their houses are worth. It appears the executive branch is trying to follow through on that promise because later in the week, the Treasury Department and Housing and Urban Development Department issued a joint statement announcing that they were hoping to use money from the Home Affordable Modification Program (HAMP) to entice the government-owned enterprises, Fannie Mae and Freddie Mac, to reduce the loan principals on certain mortgages.
Here are six things to know about the proposal.
(1) The Obama Administration intends to extend HAMP an additional year, through 2013.
(2) Although HAMP has received $29 billion for modifications, it has spent only $3 billion.
(3) The Administration intends to triple the incentives to private banks to reduce loan principals on mortgages. That means the loan’s owner will receive 18¢ to 63¢ on the dollar to write down principal instead of 6¢ and 21¢.
(4) The plan would also apply to property owners who rent their property to residential tenants.
(5) There is concern that Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco will refuse to allow the plan to go through because he believes principal reductions will cost taxpayers money. The FHFA exercises regulatory authority over Fannie Mae and Freddie Mac.
(6) HAMP has not been remarkably successful as only 900,000 households have taken advantage of the program, though the Administration predicted the number would rise to four million.
Whether the proposal makes it past the FHFA is still up in the air, but if you are underwater on your mortgage and facing financial difficulty, consulting with an experienced bankruptcy attorney can help you resolve your problems.
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 702-880-5554 to set up your free consultation.