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Survey: Housing Counselors Describe HAMP Experience as ‘Negative’

More than three-quarters of foreclosure counselors say the borrower experience when turning to the government's flagship modification program for relief is sub-par.

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The ""Government Accountability Office"":http://www.gao.gov (GAO) recently released the results of a survey it conducted among housing counselors to assess the Home Affordable Modification Program (HAMP) from the point of view of those on the ""in-need"" end of the spectrum.

Roughly 76 percent of the nearly 400 counselors polled characterized borrowers' overall experiences with HAMP as ""negative"" or ""very negative."" Less than 9 percent described the experience as ""positive"" or ""very positive.""

Many counselors responding to the GAO survey cited concerns about HAMP trial modification denials, including long waiting periods and miscalculations of borrowers' income.

A large share of housing counselors reported difficulties working with servicers. Some 39 percent said paperwork had been lost or needed to be resubmitted.

The GAO noted that Treasury has reported one of the most common reasons for canceling trial modifications is insufficient documentation. However, Treasury has been unable to determine whether borrowers had not submitted the required paperwork or servicers had lost or misplaced it, according to the report.

""[I]n the first two years of the…Home Affordable Modification Program (HAMP), more borrowers were denied or canceled from trial loan modifications than were given permanent modifications,"" the government agency pointed out.

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Nearly 46 percent of counselors said it typically takes seven months or more to receive a decision on whether a borrower has been approved or denied a HAMP trial, although Treasury guidelines set a timeline of 30 days from submission of the application.

In response to the GAO findings, Treasury officials stressed that they have taken actions to address some of these concerns and that the survey was conducted in October and November of 2010, prior to the implementation of new compliance guidelines.

For example, a new complaint escalation process was put in place in February of this year, and in the coming months, Treasury intends to release compliance assessments for each of the 10 largest HAMP servicers in order to make individual servicer performance more transparent.

However, Treasury noted that many of the concerns raised - for instance about lost documentation - were still issues and agreed with many of the specific actions identified for improvement.

Treasury officials and analysts have credited the Home Affordable Modification Program (HAMP) with providing a greater focus on modifications and standardizing payment reductions, but it has faced a slew of criticism from homeowners, consumer advocates, and lawmakers. The U.S. House of Representatives went so far as to pass a measure in late March to ""terminate the federal mod program"":http://dsnews.comarticles/house-votes-to-terminate-governments-mortgage-modification-program-2011-03-29.

But a separate poll conducted by ""Housing Predictor"":http://www.housingpredictor.com/ found that most of the American public believes it's Congress that should do more to help struggling homeowners by forcing lenders to modify mortgages.

Sixty-two percent of those polled by the online market resource said banks and mortgage companies should be required by the U.S. Congress to modify mortgages for homeowners at risk of foreclosure, while 38 percent said forced modifications are not the way to go.

The GAO report offered input from the foreclosure counselors working with HAMP on how the program could be improved. The three actions ranked highest included imposing sanctions for servicers' noncompliance, enforcing requirements for response times, and ensuring servicers work with borrowers not yet 60 days delinquent.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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