HAMP – is barely able to handle even the current volume of modifications and now here is the hump; the impending exponential increase in mortgage delinquencies coming this summer.
The popular Alt-A and Option ARMs from the height of the real estate bubble begin to reset this summer. These loans walked the tightrope between prime and subprime, and offered very low initial rates that would reset in two to five years. Whereas the current crises was a result of the subprime market at about $1 trillion, this new Alt-A and Option ARM crises will exceed $1.5 trillion. Even if the resets only go up a finite amount, it could still be too much for those homeowners making interest only payments. HAMP’s probable inability to keep up with the volume is likely to create a flood of short sales and foreclosures on the market. Follow this link to read more on HAMP New Mortgage Crisis Looming; Obama Administration’s HAMP Program Ill-Equipped.