New York -- While applauding the Obama Administrations efforts to alleviate the nation’s foreclosure crisis, National Urban League President and CEO Marc H. Morial today said that the success of the Home Affordable Modification Program will hinge on participation by lenders.
“Even a slight economic setback could cause those borrowers to abandon their loans and homes,” Morial said. “Principal reduction is clearly the last remaining significant step that needs to be taken within a structured loan modification program in order to make those modifications both affordable and sustainable for the chronically unemployed and those underwater.”
Morial said that the latest announcement appears to re-focus the program’s tactics by giving jobless homeowners a reprieve on payments while enticing lenders to finally adopt principal reduction on delinquent mortgages.
“From our vantage point, it is important that the Department of Treasury demand and require that lenders participate in the program,” Morial said. “Millions of homeowners were eligible for the original HAMP Program, but only a small percentage of eligible homeowners were approved, and of those who were approved, permanent modification was even scarcer.”
The National Urban League generally supports the plan’s emphasis on principal reduction for borrowers who owe more than 15% above their home’s current value. “Underwater” borrowers currently make up about a quarter of all homeowners and are at greater risk of defaulting because they have no equity cushion when they run into financial difficulties. We are also pleased the plan offers protection against banks that proceed with the foreclosure process while homeowners are in the process of applying for a modification – a protection for which the League has consistently advocated.
“It will be highly instructive for the nation if the industry again fails to respond promptly to the Administration’s latest call to stabilize the housing market.” Morial said. “Such a rebuke would clearly reinforce the need for stronger public sector action to require loan modifications in order to accelerate this country’s economic recovery.”
Contact: Teresa Candori, firstname.lastname@example.org, 212-558-5433
National Urban League, 120 Wall Street 8th Floor, New York, NY 10005-3904 United States