On Friday, March 26, administration officials from Treasury and HUD announced significant changes to their signature prevention program, the Home Affordable Modification Program (HAMP), that have the potential to prevent foreclosures. This is welcome news to the millions of homeowners desperately trying to keep their home off the auction block. The next step for the administration will be to ensure qualified families can actually access the program.
While overdue, the program updates include many of the changes the National Council of La Raza (NCLR) and other housing advocates have been asking for. The administration is rightly encouraging principal write downs and making the HAMP program accessible to families with a mortgage insured by FHA. Perhaps most important, the administration is clarifying that no one should end up in foreclosure before finding out if they could qualify for a loan modification. This is a good faith effort to respond to the specific concerns raised by NCLR, our partners, and leaders in communities across the country working to save homes from foreclosure.
The administration must seal the deal with homeowners in distress and ensure that they are actually able to receive help. Take the case of Ms. Baxter. She has been working with Montebello Community Development Corporation in Los Angeles, California since December. In that time, they have sent the documentation necessary to apply for a loan modification five times. In February she was denied, though the servicer could not explain why. In March, a different contact told her they were "working on it." She has played by the rules, diligently following up with her servicer, but there seems to be no end in sight.
NCLR Homeownership Network (NHN) counselors report that servicers are still losing paperwork, taking months to get back to clients, and often lack the training they need to accurately answer questions of struggling families. The changes announced today are a step in the right direction, but it is not clear that they help homeowners like Ms. Baxter and the thousands we serve through the NHN facing the same roadblocks. In addition, while there is a ray of light for unemployed homeowners, the fix would only be available to those collecting unemployment insurance, and only for three to six months.
Unfortunately, many Latino workers do not qualify for unemployment insurance and millions of Americans are facing bouts of unemployment that last longer than six months. The administration took strong steps toward updating HAMP to address today's foreclosure crisis and they deserve credit for what they've done. Still, we hope that the White House will continue to work with us to address the cracks in HAMP's armor--the voluntary nature of industry compliance and the effects of stubborn unemployment rates, especially critical in communities of color. This means crafting a strong enforcement and appeals process for families whose paperwork is lost and a solution that works for all unemployed homeowners.
There is still a long road ahead, with an estimated two million Black and Latino homeowners expected to lose their home between 2009 and 2012 and double digit unemployment. This will translate into a severe loss of wealth that affects generations. We must work together to clear all log jams and ensure we prevent as many foreclosures as possible.
How will Trump’s administration impact you? Learn more