On Friday the Obama administration announced an expansion of its Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs programs to avert foreclosures and help homeowners who are underwater.

The program expansion means to temporarily reduce the payments of unemployed homeowners as well as encourage lenders to make mortgages more affordable. Banks participating in the HAMP program will now be required to consider writing down the principal for borrowers who are eligible for that program and whose mortgage debt is more than 115% of the current value of their homes. If borrowers keep up on their payments, the principal would be reduced in stages over three years' time.

No new tax money is to be used for the expansion. Instead, the funds to provide incentives for loan servicers to participate would be drawn from the $50 billion allotted to housing in the Troubled Asset Relief Program (TARP).

First American CoreLogic estimates that about 15%, roughly eight million, of U.S. household with mortgages are behind on mortgage payments or already in the foreclosure process, while more than 11 million households are underwater on their home mortgages.

Read more in the press release, on the New York Times and Wall Street Journal.

Posted in Education And Training, MBI Headlines

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