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HAMP report indicates that nearly 30 percent of those who qualified for HAMP relief have defaulted again.

The Office of the Special Inspector General published its quarterly report to Congress.  Part of the report deals the results of the Home Affordable Modification Program (HAMP) that bailed out more than 1 million struggling homeowners.  The report indicates that nearly 30 percent of those who qualified for HAMP relief have defaulted again.

As interest rates start to rise there is fear that homeowners won’t be able to stay current on their mortgages

The report also indicates that approximately 800,000 borrowers who are still enrolled in the HAMP program will see their mortgage interest rates gradually rise starting this year — eventually increasing payments by more than $1,000 a month. As the higher payments kick in, regulators and consumer advocates fear that homeowners won’t be able to stay current on their mortgages.  The result of these defaults will be increase in foreclosure (again) and possible decrease in property values.  Unfortunately, the increase in property values (if any) is not offset by the increase in secured debt.  Most homeowners are still in a position that their home is worth less than the secured debt, therefore they cannot refinance or sell their homes.

The harsh reality is that many homeowners cannot afford their home.  They were persuaded by disreputable realtors or lenders that it was feasible to buy a home above their budget.  What is rarely talked about is the lack of accountability of realtors and lenders for guiding the borrowers into these extremely questionable loans.  Unless it is a sophisticated borrower loans like “interest only” or “adjustable rates” are time bombs just waiting to explode.

First time home buyers are especially susceptible to an unscrupulous realtor and/or lender’s urging them to sign a loan for more then they can afford.  What no one tells these borrowers is that cost of owning a home is not just the monthly payment.  It is the new roof, leaky pipes, HOA dues and assessments, etc.  No one tells the borrower that the realtor and lender make more commissions the higher the loan.

The American dream is to own a home, but the American nightmare is fighting to keep a home they cannot afford.  Be careful and use common sense when buying a home.

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Diane L. Drain

Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.

About Diane Drain:

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

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