Most Americans in the Dark on Government Mortgage Programs

by Chicago Agent

A number of programs exist to aid underwater homeowners, but a new survey suggests not many of them are aware of their existence.

A new survey by FreeScore.com has uncovered a most interesting anomaly in the housing landscape – although 22.1 percent of homeowners are underwater on their mortgages, according to CoreLogic, more than 70 percent are unaware of government programs created specifically to assist their predicaments.

Using data collected by Survey Sampling International via an opt-in panel of 300 respondents, FreeScore found that 72.76 percent of respondents had never heard of both the Home Affordability Modification Program (HAMP) and the Home Affordable Refinance Program (HARP), government-led initiatives to help distressed borrowers.

Furthermore, 5.26 percent of respondents had heard of HAMP, 8.98 percent had heard of HARP, and 13.31 percent had heard of both programs.

Additional results from the survey, though, suggest that the reason that number is so high is because homeowners have not fully researched what programs the government is offering. In response to the question “Are you aware of any new government programs to make home buying more affordable?”, 62.23 percent answered no and 37.77 percent answered yes, indicating that more homeowners were aware of the existence of government programs without a working knowledge of what the programs were, or how they operated.

Carrie Coghill, director of consumer education for FreeScore, elaborated on that divergence in knowledge, saying ultimately, the onus is on the homeowner to investigate how the programs apply to their loans.

“While one-third of people have heard that there are government programs to make home buying more affordable, it makes sense that less have heard of HAMP and HARP as they are specific programs for troubled borrowers,” Coghill said. “When homeowners look into these loans, they also need to understand that these modified loans will reflect on their credit report. It will show that they are current on payments, but on a modified amount.  If people are concerned about being able to afford their home, they should look into HAMP and HARP.”

Designed to aid underwater borrowers with GSE loans, both HAMP and HARP have fallen far short of their initial target goals. According to recent projections, HAMP is on pace to modify 1.2 million loans by the end of 2012 when it expires, nearly three million shy of the initial goals for the program.

special report filed more than a year ago by the Office of the Special Investigator for the Troubled Asset Relief Program laid the blame for the program’s lackluster performance on the Treasury Department and the servicers recruited by HAMP in equal measure.

Scorching in its tone, the report criticized the rushed, disorganized 2009 launch that decidedly lacked guidelines and adequate market analysis, and the lost paperwork, confusing regulations and other “blatant” forms of negligence the servicers followed to avoid the modifications. The report argued that because servicers were modifying their own loans – and therefore losing revenue on the modified loans lower interest rates – they had little incentive to follow the program’s aims.

In his State of the Union Address, President Obama did announce an ambitious expansion of the government’s refinancing plans to incorporate non-government loans, but it does require congressional approval, which, some speculate, leaves it no chance.

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