Mortgage modification future

CoreLogic’s ( latest monthly foreclosure report indicated a continued downward trend.  In fact, July’s national foreclosure inventory rate of 0.91% was the 57th consecutive month (almost 5 years) with a lower number of foreclosures nationwide.  Even the current 2.9% national rate of home owners considered “seriously delinquent” is also lower from last July.  (Maryland’s foreclosure inventory and seriously delinquent rates are higher than the national average at 1.2% and 4.1% respectively.) All thanks to mortgage modification and foreclosure alternatives.

Frank Nothaft, chief economist at CoreLogic, contributed the decline of foreclosure inventory to a combination of loan modification, foreclosures, and a strong housing market.  Additionally, he stated that “The U.S. Treasury’s making home affordable program has contributed to the decline through permanent modifications, forbearance and foreclosure alternatives which have assisted 2.5 million home owners with first mortgages at risk since 2009.”

In the immediate aftershock of the foreclosure and subsequent financial crises, which began almost nine years ago, the government stepped in to help out at risk home owners.  The rollout of HAFA, HARP, and HAMP was bumpy and it took time for the programs to work efficiently.  Of course, these programs were not intended to continue on forever, and in fact were supposed to end several years ago.  Fortunately, Congress, the Treasury and the FHFA have recognized the need for continued assistance and extended the programs.  Providing foreclosure alternatives and mortgage modification reduces vacant homes, bolsters communities, and helps maintain a healthy housing market.

Although these mortgage assistance programs were intended to be temporary, it’s clear that a permanent solution is necessary.  The notion that a foreclosure crisis won’t or can’t happen again is naïve.  Historically, housing downturns and recessions are cyclical.  And when an economic decline occurs, a home owner assistance program should be available to provide borrowers with alternatives to foreclosure.

The Federal Housing Finance Agency ( announced in an August 25th press release that HARP will be extended through September 2017.  But that will be the end of Home Affordable Refinance Program (HARP) as we know it, because a new program is slated to begin October 2017.  The new program is to be a streamlined version that will also allow those whose mortgages exceed Fannie and Freddie’s loan limits to refinance.

FHFA stated that specifics for the HARP replacement will be released as the rollout date approaches.  However, it is anticipated that the program will not require a minimum credit score; will not place limits on the borrower’s debt-to-income ratio; nor will it limit the mortgage to a maximum loan-to-value.  And unlike many refinance programs, an appraisal may not be required.  And improving from the HARP program, there won’t be cut off dates, and borrowers can use the program multiple times.

The Home Affordable Modification Program (HAMP) unfortunately is slated to conclude at the end of the year without a viable replacement.  However, the Mortgage Bankers Association have stepped in to create a streamlined solution to fill the gap.  A September 23rd press release ( announced its successor to HAMP: “One Mod: Principles for Post-HAMP Loan Modifications.”

J. David Motley, CMB Vice-Chairman of the Mortgage Bankers Association, stated, “With Treasury’s HAMP program soon coming to an end, we all recognized that investors, borrowers, and servicers need a replacement program that provides clarity and simplicity to homeowners experiencing difficulty maintaining their mortgage paymentsOne Mod could meet that challenge by providing affordable and sustainable payment structures that improve the likelihood of success for participating borrowers.

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By Dan Krell
Copyright © 2016

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