Feds try for greater foreclosure prevention

Homeowners whose property is worth at least 15 percent less than the amount of their first mortgage may be eligible for a reduction, "but not every underwater borrower will benefit from principal reduction through the HAMP program," according to the document at the Making Home Affordable Web site.

Mortgage servicers and investors will contact homeowners who are eligible, according to the document.

More than 11.3 million U.S. residential properties -- nearly one in four -- with mortgages are now underwater, according to a recent study by First American CoreLogic.

Some homeowners definitely will be excluded from the program, according to the Treasury Department statement.

"For example, investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes," the statement says. "Some people simply will not be able to afford to stay in their homes because they bought more than they could afford."

Unemployed homeowners who qualify for temporary payment reduction must live in their homes and have mortgages that meet other HAMP guidelines, such as a loan balance below $729,000.

They also must submit evidence that they are receiving unemployment assistance and must request temporary assistance in the first 90 days of delinquency.

Heavy fire

The new guidelines arrive as the administration is taking heavy fire for the failure of earlier loan modification efforts.

As of the end of February, permanent loan modifications had been granted to just 170,000 homeowners nationwide, according to the Treasury Department. Meanwhile, more than half of modifications have fallen 60 or more days past due within nine months of the modification.

Earlier this week, Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, ripped the administration's HAMP efforts and suggested the program might be doing more harm than good.

Other critics have suggested that foreclosure-prevention efforts are doomed to fail without an element of mortgage principal forgiveness. That view may be gaining mainstream acceptance, given the administration's new guidelines and Bank of America's announcement earlier this week that it would start offering home loan forgiveness.


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