The Home Affordable Modification Program (HAMP) was expected to help between three to four, million Americans who could no longer afford their mortgage payments. To date, less than 500,000 homeowners have gained modification help.

Homeowners seeking loan modifications are finding it difficult to keep up with payments, while trying to obtain answers from lenders.

Home prices are at an all-time low, as some homeowners wait to sell unaffordable homes. Low mortgage rates, coupled with a semi-optimistic buyers’ market, may mean changes are underway. Yet, home sales remain stagnant as buyers consider alternative housing options. Thousands of homeowners caught in limbo are seeking lender assistance.

According to a Treasury Department press release, lenders are receiving more than 8,000 phone calls related to HAMP daily. This pales in comparison to the number of lender representatives available to answer these calls. As a result, thousands of homeowners seeking a HAMP application or mortgage modification application are being put on hold, in more ways than one.

Another reason why home-modification applications are not being approved is directly linked to Fannie Mae. Homeowners who have Fannie Mae loans can no longer qualify for a modification arrangement, if unemployed. Previously, unemployed homeowners were applying for modifications by including unemployment benefits as a form of income. Fannie Mae has recently put a stop to these applications by disallowing the use of unemployment benefits as a means of steady income.

Fannie Mae representative, Amy Bonitatibus, recently told CNN that the company does not “want to set up borrowers to fail.” Instead, Fannie Mae has employed a tough-love tactic that has left thousands of homeowners in the dark. The Treasury Department issued a similar restriction involving HAMP loans this past July.

There are some other speculations as to why more mortgages are not being modified. Some believe that banks simply aren’t seeing enough government incentives, while others believe that fees charged for missed payments are more enticing to servicers than loan modifications.

Lenders argue that home modifications take time, and that many homeowners aren’t qualifying for a mortgage modification regardless of current hardships. Whatever the reason, HAMP hopefuls will have to keep making mortgage payments or risk foreclosure.

Posted in: Foreclosure
Tags: fannie mae, HAMP, modification applications, mortgage payments, unemployment benefits