August 22, 2014

Why HAMP needs to be dissolved immediately!

By Timothy Stull (

In the dead of Winter of 2009, our country was in the midst of the worst mortgage / financial crisis since the Great Depression.  Newly appointed President Obama launched a pilot program ~ Home Affordable Modification Program ~ HAMP for short.  This program was set in motion to save 8 million home owners.  The Federal Government gave the banks a 170 billion dollar bailout through TARP (Troubled Asset Relief Program).  There was no contract stipulating the banks need to comply with loan modification rules, HAMP or loan workouts.  It was simply a “handshake” deal…..a deal that done more harm than good to the US economy.  Here are the reasons we must dissolve HAMP now.


  1.  There are not any concrete rules that the banks need to follow.  The rules are there are no rules!  It is a volunteer program that banks, servicers or investors have a choice to participate in.  You can be denied for any reason.  There is no teeth to the program guidelines and ton of ambiguous loop holes a bank can use to deny an applicant.  One day you could be denied for making too much money & the next for making too little money…..Net Present Value a favorite reason for denial amongst the banks.  You have better shot of winning the lottery than getting complete cooperation on a voluntary HAMP submission to your bank / loan servicer.
  2. The banks really don’t want to utilize HAMP, because of low economic benefit.  They get paid little money for restructuring hundreds of thousands of dollars.  It makes absolutely no sense for the bank to do this voluntarily.  Granted the banks were given TARP funds and bailed out….but with no strings attached from the Federal Government.  This is what set up the huge mess we have today.    In the real world, if you fall behind on your mortgage, the bank tried to collect the full amount due….period.
  3. HAMP was designed to service a depressed economy….not a recovering one.  From 2007 to 2011 home prices were declining, wages were depressed and unemployment was 9%+.  Banks had all the incentive to work out a deal with you.  They did not want the property & needed cash flow….they were rolling out the red carpet on mod deals.  We now live in a new era….increasing home prices, higher wages and unemployment at 6.2%.  Banks know they can get the money if they squeeze hard enough….everyone wants to save their home now….nobody wants to walk away.  The banks are not interested in cooperating with the Government on a charity mission.  We now live in the era of the big money collection game.
  4. It costs US taxpayers way too much money.  This program has lasted for nearly six years and has only helped 900,000 achieve permanent loan modification deals.  The total cost has been 720 BILLION dollars.  It has cost every taxpayer over $46,000.  Every deal has cost over $20,000 to complete on the banks side.  Nobody has any interest of paying these ridiculous taxes for this program.
  5. Banks will not expand and absorb risk on new mortgage loans.  Banks have no interest in absorbing any risk, when they have to jump through a million hoops to collect funds.  They don’t want to deal with delinquent mortgagees hiding behind a Government front.  This has currently thwarted a stable long run recovery in housing.  Once the investors pull out of the current market, we will have another serious housing mess.  It has sidelined a large portion of “would be” home owners.  The exponential negative effects on the overall economy are enormous.


A lot of the severely distressed loans have been sold off into the non-bank servicing arena.  The big banks ~ Wells Fargo, Chase, Bank of America and Citi have been sued 1000 times over.  They have really have no interest in servicing severely delinquent mortgage loans.  Hence, they have sold off large portion of these loan portfolios to firms like Ocwen, Seterus & NationStar.  These particular firms operate just like giant collection agencies.  They have all claimed that they never accepted TARP funds, so they will not participate in HAMP.  All of these firms, especially Ocwen, abuse clients by padding balances & escrow accounts.  Since  they have purchased the rights to the debt at a serious discount, they have no interest in modifying the loans.  They are playing hardball collections and foreclosing.

Let’s face it, people that apply for loan modifications in effort to save their home.  The Government has done a very good job portraying this process as easy and fluent.  It is far from that and the public must be made aware of the challenges that lie ahead in this process.  Essentially, the public has been misled in a false sense of security, since they have placed trust in this program.  Any time you are dealing with big money, defaulted debt and collections, you are dealing with a very brutal landscape.  The big money collection game is all about the MONEY.  If you don’t have a strong defense to increase your leverage, you are sunk.  I have worked within the big money collection arena / distressed credit markets for 26 years.  I worked in legal collections representing banks for 13 years and I have defended debtors for 13 years.  I have worked on over 10, 000 complex mortgage loan work outs.  The only process that works involves intense negotiations and long run battles.  I have the winning track record to prove it.  I can assure you that the banks, bill collectors and investors are in it for the big money.  Don’t let anyone fool you and brainwash you into thinking differently.

Dissolving the program may spur short term pain for the public, but it will also provoke significant economic growth on numerous levels.  Increased lending and a transparent system in the distressed credit markets will lead to more lending ~ residential and business.  More lending will lead to more cash flow…..more cash flow will lead to higher quality jobs.  This is how a healthy economy functions.   I commend the Federal Government for launching HAMP when the economy was in dire straits, but now it is time to “cut the cord” so everyone can move on to more prosperous life.

As always, feel free to call my office at 877.297.7011 for free advice or private consultation on any credit, foreclosure or collection matter.

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