Nearly 2.5 million properties have been helped by federal efforts in the past few years to stop foreclosures and refinance underwater homes, a number big enough to ask: Will those who have been helped turn out for President Obama or Gov. Romney?
As we wind down to Election Day every sector, slice and segment of the population has been analyzed to determine how it will vote in the presidential contest. If you want to know about the electoral preferences of left-handed fly-fishermen who live east of the Mississippi there's probably a consultant somewhere with such data.
The coalition of mortgage survivors is real and it's concentrated in many of the swing states that have been hard hit by foreclosures, short sales and REOs, including Florida, Nevada and Ohio. The coalition is also large: If you figure about 2.6 individuals per household then we are looking at roughly 6.5 million people who have received federal help, many of whom both vote and are located in hotly-contested battleground areas.
There have been a number of government efforts to stop foreclosures and help underwater borrowers but at this point the best known are HARP and HAMP. Here's how the programs play out:
The Home Affordable Refinance Program (HARP) was set up in 2009 to help underwater borrowers. Because the value of their home is less than the outstanding loan amount, no private lender will refinance such properties. HARP opens a door to lower monthly costs through refinancing for these borrowers.
The original idea has been revised over time and now the program looks like this: Even if you're underwater you can get a new loan at today's rates if your mortgage is owned by Fannie Mae or Freddie Mac, you have had no late payments in the past six months and not more than one late payment during the past year. The loan must have been originated before June 2009.
So far 1.6 million homes have been refinanced under HARP, including this year 618,000 properties through August.
While HARP is for people with good credit but soggy home values, the Home Affordable Modification Program (HAMP) is for those facing tough times, including investors. Without HAMP such owners would be foreclosed in virtually every case.
Started in 2009, owners generally qualify for HAMP assistance if they have a financial hardship and are either delinquent or in danger of being delinquent. (Non-owner occupants must actually be delinquent.) The loan must have been originated on or before Jan. 1, 2009, and the loan amount for a single-family property cannot be more than $729,750.
Under HAMP the borrower's financing is revised so that payments are reduced. The typical HAMP borrower, according to the government, saves $536 per month — a significant sum for struggling households.
The catch is that borrowers must be able to pay the new and lower monthly payment, a requirement which simply does not work for many of those who have lost jobs or seen income decline. As of August the HAMP program has resulted in 2 million three-month trials but "only" 831,661 test runs have morphed into permanent modifications. Another 64,863 are still in the trail phase, their fate unknown.
You can look at the numbers and say that more than a million HAMP applicants failed and faced a short sale, deed-in-lieu of foreclosure or foreclosure itself. Or you can say that nearly 900,000 homes have been saved from foreclosure.
The real question is what HAMP and HARP borrowers will say at the polls. Will they be grateful for government assistance or resent it? If they could not get new financing will they blame the government? No one knows, but in a tight race election-night results may well hinge on the answers to such questions.
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