Nearly half a million homeowners nationwide who took part in the HAMP program are about to be hit with rising mortgage payments. This includes the thousands of struggling homeowners who depended on the government’s assistance to get them through the housing crisis. Now, those same individuals are looking at the possibility of not being able to count on that support much longer. And, the combination of rising interest rates on their modified loans as well as higher homeowners insurance costs could have an adverse effect on their financial stability.
Progressively, over the next few years, local homeowners who opted to participate in the federal program that lowered the interest rates on their residential mortgage, will be faced with higher payments as the initial low rates they were assigned begin to reset. Further contributing to the pain, is the fact that another federal program specifically designed for residential borrowers to aide them to refinance their homes expires at the end of the year.
Implemented in 2009, following the housing bust of 2008, one of the largest resources to assist affected homeowners was the federal Home Affordable Modification Program or (HAMP). Under the program, homeowners who had difficulty making their mortgage payments were assigned interest loans as low as 2 percent in an effort to help ease an increasingly growing problem. Unfortunately, those introductory rates were limited to a period of only 5 years and are set to rise by 1 percent per year until they reach pre-HAMP levels.
Needless to say, the result could be mortgage payments that are possibly much harder to make starting this year. Although, the nationally estimated average increase for the first monthly payment is expected to be in the $95 range, certain parts of the country could pay substantially more. Because fewer resources to help people in financial distress will be available and thousands of homeowners are going to have rate increases, a potentially serious issue could be on the horizon, which may not bode well for the nation’s economy.
In some cases, rising rates began for a number of homeowners last year. But, the amount of those affected by the increase is expected to jump substantially in 2015, due to a large group of individuals taking advantage of the assistance program in 2010. And, while the state of the housing market is in the process of recovering somewhat, the fear among experts is that the higher payments could greatly affect homeowners whose financial situations have still not improved to any great extent over the past five years.
As of July 2014, statistics showed that approximately 184,000 Chicago-area residents had taken part in the Home Affordable Refinance Program. That, by itself, could present a problem as it expires at the end of this year. Those homeowners who are barely getting by and are having renewed difficulty making their current mortgage payments, even with government assistance, stand the chance of going full circle 5 years later, ending up in the same predicament they were in prior to HAMP.
If nothing else, the HAMP program proved itself to be of great assistance to many homeowners while it was in effect. But, one has to wonder what the outcome will be once all programs are no longer available, interest rates reset, and monthly mortgage payments increase. Only time will tell.
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Did you participate in the HAMP program? If so, did it help you as it was intended to? Feel free to share your thoughts in the comments section below.