Friday, January 22, 2010

HAMP Changes Coming

by Bill McBride on 1/22/2010 12:27:00 AM

But what changes isn't exactly clear ...

From Peter Goodman at the NY Times: Treasury Weighs Fixes to a Program to Fend Off Foreclosures

The Treasury is likely to alter the program by making pay stubs an acceptable means of verifying income, rather than requiring tax documents ...

The changes by the Treasury Department are expected to include greater assistance for homeowners no longer able to make mortgage payments because their paychecks have shrunk ... The Treasury was still debating the method ... looking at either direct cash assistance or a grace period in which borrowers could postpone payments. That component may not be announced next week, but would follow soon after.
...
The changes to be introduced next week are unlikely to address what has emerged as a potent factor propelling a wave of foreclosures: the roughly 15 million borrowers who are said to be underwater ...
Unless I'm missing something, the only change to be announced next week, mentioned in the article, is allowing borrowers to use pay stubs to verify income, as opposed to providing tax documents. That doesn't make much sense since it is pretty easy to provide tax documents, and underwriting in arrears is one of the keys to the program (the failure to document income was one of the problems with nontraditional mortgages). This sounds like another delaying tactic.

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