King County Home Solutions

New Short Sale Rules to Help Stop Foreclosure

 In a press release dated December 5th 2009 the treasury department released new rules and incentives for homeowners involved in loan modifications and short sales. According to treasury department reports the Home Affordable Mortgage Program (HAMP) currently has 375,000 homeowners going through the trial period phase of the program. During the trial loan modification period the homeowner has to provide completed documentation, and make their mortgage payments for 3 months in a timely manner. An informal survey by the treasury indicated that only 30% of the homeowners have completed their paperwork and turned it in. The treasury department program has estimated that of the homeowners who initially qualify, then complete the trial period, and complete the paperwork and have their loans modified, 40% will re-default within the 5 year program. Avoiding foreclosure is still the programs primary objective for homeowners who want to stop foreclosures on their homes.

Doing the math suggests that of the 100% of the trial period participants, only 30% are complete the trial period, and 60% of those will be successful make payments without a re-default. That suggests that the Home Affordable Mortgage Program will have a success rate of about 18% for those homeowners who are attempting to avoid a foreclosure through the program, and who take the steps necessary to get involved. Finding information on how many homeowners of the total who are in default or at risk in total is difficult to estimate in conjunction with the early December press release, but a look back at Septembers numbers reveal some insight.