All over the country, homeowners in mass are reporting the same story almost verbatim: I bought big, I had a great credit score, and then the market tanked and no one would talk to me on equals terms. As the HAMP program ages, it is becoming more apparent that banks are willing to test its limits and ignore calls by policymakers to conform or reform to HAMP rules. However, it may be that HAMPs or Making Home Affordable Program efforts are both too rigid or simply too little, too late. What is HAMP designed to do? As the name suggests-Housing Affordable Modification Program, HAMP was initially designed to save troubled homeowners as the housing market and economy collapsed.
This program offered incentives to banks that worked with homeowners to favorably renegotiate the terms of their mortgages through loan modification. Because of the scale of the foreclosure problem, the government saw intervention as mandatory. Failure to do so would put millions of people out of their homes and stymie the already wanton US financial system. Unfortunately for many people, there is one major caveat: you must be behind on your loans to qualify. At least so far as banks are concerned. The language of the HAMP program explicitly states that where default is imminent, a homeowner qualifies for assistance through a loan modification; many banks have flatly refused to help homeowners who haven't yet defaulted.
Banks won't surrender profitability to save borrowers' credit reputation- It is unclear why banks have been resistant to modifying home loans on borrowers who aren't yet delinquent, but the prevailing wisdom suggests that they are probably capable of making their payments. Plainly, banks are willing to let burdened borrowers work for their mortgage, despite an underwater home or reduced quality of living. In the banking world, it simply doesn't make sense to renegotiate with a homeowner who hasn't yet defaulted-it's just giving up money.
For the borrower, defaulting or falling behind on their mortgage payments results in a major hit to their credit. Both the social stigma and inability to find new credit are enough for some troubled borrowers to go to extraordinary lengths, like finding a second job, to keep up on payments on homes that have negative equity. This is just one group of 'qualified' people who can't get assistance from a HAMP loan.
Home Buyers' Plan- For most people looking to buy their first home the monthly mortgage payments are not the issue. Mortgage payments are usually close to what they are already paying in rent. The biggest obstacle to buying a home is coming up with the down-payment. If you have money in your RRSP however you can withdraw up to $20,000 tax free for the purpose of using it as your down-payment. This money needs to be paid back to your RRSP within fifteen years and payments need to be made to it every year. It is important to do your research and speak with your real estate professional to find out more on theses programs and which ones you will be eligible for. Even qualifying for only one program can save you a substantial amount of money.
This program offered incentives to banks that worked with homeowners to favorably renegotiate the terms of their mortgages through loan modification. Because of the scale of the foreclosure problem, the government saw intervention as mandatory. Failure to do so would put millions of people out of their homes and stymie the already wanton US financial system. Unfortunately for many people, there is one major caveat: you must be behind on your loans to qualify. At least so far as banks are concerned. The language of the HAMP program explicitly states that where default is imminent, a homeowner qualifies for assistance through a loan modification; many banks have flatly refused to help homeowners who haven't yet defaulted.
Banks won't surrender profitability to save borrowers' credit reputation- It is unclear why banks have been resistant to modifying home loans on borrowers who aren't yet delinquent, but the prevailing wisdom suggests that they are probably capable of making their payments. Plainly, banks are willing to let burdened borrowers work for their mortgage, despite an underwater home or reduced quality of living. In the banking world, it simply doesn't make sense to renegotiate with a homeowner who hasn't yet defaulted-it's just giving up money.
For the borrower, defaulting or falling behind on their mortgage payments results in a major hit to their credit. Both the social stigma and inability to find new credit are enough for some troubled borrowers to go to extraordinary lengths, like finding a second job, to keep up on payments on homes that have negative equity. This is just one group of 'qualified' people who can't get assistance from a HAMP loan.
Home Buyers' Plan- For most people looking to buy their first home the monthly mortgage payments are not the issue. Mortgage payments are usually close to what they are already paying in rent. The biggest obstacle to buying a home is coming up with the down-payment. If you have money in your RRSP however you can withdraw up to $20,000 tax free for the purpose of using it as your down-payment. This money needs to be paid back to your RRSP within fifteen years and payments need to be made to it every year. It is important to do your research and speak with your real estate professional to find out more on theses programs and which ones you will be eligible for. Even qualifying for only one program can save you a substantial amount of money.
