Tim Fernholz explains why the Marking Home Affordable program isn’t working:
The Making Home Affordable program, announced last February and begun in earnest in April, consists of two primary components: The first involves helping borrowers in danger of losing their home modify their loans. The second allows homeowners who owe more than the value of their home to refinance at lower interest rates. The latter objective has worked more or less as planned, if very slowly. But the former — called HAMP, for Home Affordable Modification Program — has come under criticism since its inception.
At first, critics were concerned that HAMP simply replicated the predatory loan modifications offered voluntarily by the mortgage industry. But the program’s standards are such that, when it works, it works: Participants end up paying only 31 percent of their monthly income to stay in their home, a very affordable standard. The administration has focused, rightly, on making sure borrowers can manage their monthly payments as the benchmark of their plan’s success.
