HAMP redefault rates projected as going up

This just in from DSNews:
The government's Home Affordable Modification Program (HAMP) has been widely criticized for its substandard results, and a new report from Fitch Ratings indicates that even the small successes it's made so far may soon be reversed. The company says that within 12 months, as many as 65 percent of the prime loans modified under the federal program will likely re-default. For modifications on subprime loans, the projection is even higher - 75 percent. What's worse is that Fitch called its estimates "conservative."

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Comment by Mike Linkenauger on June 17, 2010 at 9:18am
Most loan mods are just like putting a band-aid on a "hemmorrage". The don't stop the bleeding! You take a homeowner who owes 500K on a 300K house and can also adjust them to a 100 year loan with a 1% interest rate, you still have somebody that is 200K underwater! I can't blame them for re-defaulting on their loans! I think the program will help some that want to keep their homes, but for many that are this far upside down, what options do they have.

A manager of asset managers with Fannie Mae told me last week that this year so far, 29% of ALL defaults are structured defaults. This means that the person does NOT have to sell, they just refuse to stay so far underwater any longer and have walked away. Scary statistic!

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