Photo: Jeffrey Turner
For five years now, the U.S. Department of the Treasury and U.S. Department of Housing and Urban Development have successfully administered the Home Affordable Modification Program (HAMP) for struggling homeowners. Through this program, working homeowners secured lower and more affordable mortgage rates, enabling families hit hard by the financial crisis to stay in their homes and avoid foreclosure.
This year, the program is set to begin winding down and expire entirely in 2015. That means the nearly 800,000 homeowners with HAMP mortgage adjustments will see their monthly payments rise as soon as this year. While the rate increases can vary widely from state to state, the national average increase will be $200 a month. In states with more HAMP mortgages, such as California and Hawaii, rates will jump by $300 and $356 per month, respectively. While this might not sound burdensome to some, for working families on the brink it is potentially catastrophic.
To keep 800,000 struggling American families in their homes during our weak economic climate, HAMP’s low mortgage rates should be extended or made permanent for all participants.
When HAMP was first drawn up in 2008, the idea was to temporarily stop the bleeding from the foreclosure crisis and ease the lowered mortgage rates back to their original market levels once the economy improved after two years. In 2008, that seemed like plenty of time for homeowners to get back on their feet.
Unfortunately, this is not the reality in 2014. Incomes are stagnant for all but the richest Americans, and the economy has not sufficiently recovered. Unemployment remains stubbornly high, with Latinos especially affected. The Latino community lost vast amounts of generational wealth during the recession, and millions of families are barely scraping by.
Recognizing that the Great Recession was much deeper and the recovery slower than thought in 2008, HAMP has already been extended twice.
To raise the rates on 800,000 families now would only further damage the economy by pushing an unconscionable number of working Latino families into default. During a weak recovery, the solution cannot be to force families out of their homes.
For the sake of nearly one million American families and our entire economy, affordable HAMP mortgage rates must be preserved through an extension or made permanently available.