About 25 Percent of HAMP Homeowners in Default Again

Data from the Treasury Department indicate that more than 25 percent of homeowners who have received assistance from the Home Affordable Modification Program (HAMP) are behind on their new mortgage payments. DSnews.com picked up the statistic from Assistant Treasury Secretary Herbert Allison’s testimony before a congressional oversight panel, in which he stated that just “73 percent of borrowers are current in their trial plan payments.”

NeighborWorks America believes that one way to reduce the default rate is for homeowners to receive the lowest sustainable mortgage payment possible when they rework their mortgages. Foreclosure counseling also greatly increases the chances that homeowners will be successful in their efforts to keep their homes.

In a report released in November, NeighborWorks America found that homeowners who received loan modifications through the National Foreclosure Mitigation Counseling (NFMC) Program lowered their mortgage payments significantly more than homeowners who received loan modifications without NFMC Program counseling.

NFMC Program clients, with the help of their counselors, secured loan modifications that lowered their monthly mortgage payments $454 more than the clients who received modifications without foreclosure counseling, which results in an average annual savings of $5,448. The same report found that NFMC clients are 60 percent more likely to avoid foreclosure than homeowners who don’t seek counseling.

Read “Quarter of HAMP Mods in Default Again” at DSnews.com

Learn more about the NFMC report in the NeighborWorks newsroom.