The End of HAMP?

In yet another blow to the government’s mostly-failed Home Affordable Modification Program (HAMP), the House plans to vote by the end of the month to cut off funding for the Obama administration’s main foreclosure prevention plan, according to Alan Zibel’s Wall Street Journal blog.

In nearly 2 years, the program has assisted approximately 540,000 borrowers, far short of the anticipated 4 million homeowners.  Of course, this whole exercise may not make it past the Democrat-controlled Senate or the President’s veto pen.  But the handwriting on the wall spells out impending doom for homeowner assistance programs, such as HAMP and its short sale counterpart HAFA (Home Affordable Foreclosure Alternatives), that depend on federal tax dollars.

If these government options are in fact eliminated, what will the remaining options be for underwater borrowers?  Obviously, short sales and loan modifications will not go away, but they will need to be completed by private parties.  Enter real estate and tax attorneys, investors, Realtors, etc.  The private sector will have to figure out, as it already is, how to deal with over-leveraged properties.  And of course, if it succeeds, it will generate tax revenue, while benefiting homeowners.

We still have a long road ahead of us, but I believe this is the only way the real estate market will recover.

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