Average HAMP Homeowner Owes $1.50 for Every Dollar Their Home is Worth

News just moved from bad to worse for many homeowners seeking shelter under the Obama Administration’s Home Affordability Modification Program (otherwise known as HAMP).

Recent government figures show that the average beneficiary of the administration's flagship homeowner-assistance program owes their mortgage lender more than $1.50 for every dollar their home is currently worth. As a result, many more homeowners than expected are underwater (owing more than their homes are valued), facing foreclosure and will likely be forced to walk away from their mortgages in the near future.

As The Huffington Post reports,  “A recent study by Federal Reserve economists shows that underwater homeowners are, not surprisingly, much more likely to default on their mortgages. Moreover, borrowers who are deeply underwater -- like those in HAMP, who average negative 50 percent home equity -- are far more likely to default willingly; that is, to give up on trying to overcome their growing mountains of debt, and just stop paying at all. This revelation underscores the problems with the path taken by the Treasury Department to help homeowners, who merited federal attention only after the government gifted the banks and Wall Street with hundreds of billions of taxpayer dollars to survive a financial meltdown largely of their own making. Rather than designing a program exclusively focused on homeowners, the administration chose to set up an initiative that seeks to balance the needs of homeowners with the interests of lenders and investors. Thus, while the average homeowner in the program is saving more than $500 a month, 28 percent more homeowners have been bounced from the program than have been helped. Homeowners that receive permanent reductions in their monthly mortgage payments end up deeper underwater than they were before they were ‘helped.’ Meanwhile, lenders and investors continue to foreclose on properties at a record pace.”

This result is shocking considering the HAMP’s costs and the fact that the $75 billion plan was recently reworked in an attempt to help those hardest hit by the housing crisis—targeting homeowners who were unemployed; underwater in their mortgages; or even those homeowners who are bankruptcy bound.

Coincidentally, as American homeowners search for more immediate and steady mortgage help, many are instead turning to the simplicity of bankruptcy to stop their impending foreclosure and other creditor actions. In fact, unlike HAMP, bankruptcy seems tailor-made to help beleaguered mortgage holders to hold on to their homes if they can afford to pay their arrears through a  Chapter 13 bankruptcy plan; or, instead, walk away without fear of lender reprisal (via either Chapter 13 - in most circumstances - or Chapter 7). So, if you’re having trouble making your mortgage, living in a home that will never accrue equity, and/or residing in an area that is currently devalued and will be nothing by a blight on your budget for the foreseeable future, bankruptcy can help get you back on the right side of the proverbial tracks.  A bankruptcy will allow you to surrender your underwater home, negate your personal and financial liability, and move forward financially in a new, and most importantly, affordable place.

Your first best on the road to an effective bankruptcy is knowing a qualified bankruptcy attorney who can help you to conquer your mortgage creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond a recession that has “HAMPered” many a homeowner. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-833-627-0115, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.