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Wednesday, January 06, 2010

Report: HAMP Second Lien Modification Program “On Hold”

by Calculated Risk on 1/06/2010 09:37:00 PM

Housing economist Tom Lawler emailed the HAMP administrative website to obtain a list of servicers who had signed up for the Second Lien Modification Program. Here is the response he received:

“That program is currently on hold and there is no list of servicers that registered before it was placed on hold.”
The Second Lien program was announced on April 28, 2009 by Treasury:Parallel Second Lien Program to Help Homeowners Achieve Greater Affordability
The Second Lien Program announced today will work in tandem with first lien modifications offered under the Home Affordable Modification Program to deliver a comprehensive affordability solution for struggling borrowers. Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate.
And from the HAMP website:
The Second Lien Modification Program is a complementary program to the Home Affordable Modification Program designed for first lien mortgages. This Program is expected to reach approximately 1 - 1.5 million responsible homeowners who are struggling to afford their mortgage payments. The Second Lien Modification Program coordinates with HAMP's first mortgage modification program to lower payments on second mortgages and offer comprehensive affordability solutions for homeowners.
I guess that program is falling a little short.