Making Home Affordable Program

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The Making Home Affordable Program, or MHA, is a TARP program set up as a foreclosure mitigation plan intended to help bring relief to responsible homeowners struggling to make their mortgage payments while preventing neighborhoods and communities from suffering the negative spillover effects of foreclosure, such as lower housing prices, increased crime, and higher taxes.

MHA Programs

MHA consists of two primary programs:

  • The Home Affordable Refinance Program (HARP) helps "upside-down homeowners" (those who are current on their mortgage payments but owe more than their homes are worth) refinance into more stable, affordable loans. As of September 1, 2009, HARP has closed 95,729 refinancings, "hopefully reducing the number of homeowners who may face foreclosure in the future." [1]
  • The larger Home Affordable Modification Program (HAMP) reduces monthly mortgage payments in order to help borrowers facing foreclosure keep their homes. As of September 1, 2009, HAMP facilitated 1,711 permanent mortgage modifications, with another 362,348 additional borrowers in a three-month trial stage. [1]

Studies and Criticism of HAMP

Based on a study released on HAMP by the U.S. Department of Treasury and Department of Housing and Urban Development, the program may fall very short of its intended goal. If the goal of the program was to prevent foreclosures, HAMP is not effective. [2] "According to the latest report, there are about 780,000 active trial modifications and about 230,000 active permanent modifications. The figures below show the cumulative monthly trial and permanent modifications started. Treasury’s expectations were that HAMP would “help as many as 3 to 4 million at-risk homeowners avoid foreclosure.” If the “help” that Treasury suggested refers to permanent modifications, then the program is far short of reaching of its goal. Even if the goal applies to trial modifications offered, the declining rate of increase of trials indicates that this, too, likely won’t be achieved." [3]

Other data shows that HAMP has kicked out many homeowners out of the Obama administration's foreclosure prevention program. The numbers show that more than 123,000 homeowners were ousted from HAMP compared to the 60,000 homeowners who were offered to join the program. [4] May "is the first month since the administration started reporting cancellation figures that the number of canceled modifications outpaced the number of new permanent modification offers. The number of canceled modifications skyrocketed 82 percent in April compared to March." [5] "The average beneficiary of the Obama administration's flagship homeowner-assistance program owes their mortgage lender more than $1.50 for every dollar their home is worth, which means they fall into the stratum of homeowners most likely to simply walk away from their mortgages, recent government data show." [6]

More interesting is a Federal Reserve study. Federal reserve economists found that "underwater homeowners are, not surprisingly, much more likely to default on their mortgages. Moreover, borrowers who are deeply underwater -- like those in HAMP, who average negative 50 percent home equity -- are far more likely to default willingly; that is, to give up on trying to overcome their growing mountains of debt, and just stop paying at all." [7]

The program is not designed in an efficient manner. "As few as 0.1 percent of mortgage modifications initiated under the Obama administration's signature foreclosure prevention program involve reductions of principal, according to a federal report released Wednesday. Research by state regulators, academics, and by the Federal Reserve shows that principal reductions lead to more sustainable loan modifications. In other words, they're the best way to ensure that troubled borrowers don't lose their homes." [8]

A Congressional Oversight Panel released as study finding that, "the administration projects only one million families will end up with lower monthly payments as a result of the program. The report says six million families are more than two months behind with their payments, and 200,000 more families receive foreclosure notices each month." [9] "A year and a half after launching the program, “Treasury is still fighting to get its foreclosure programs off the ground,” Elizabeth Warren, who heads the independent panel set up by Congress, told reporters Tuesday." [10] "“Redefault signals the single worst form of failure” by the Treasury Department, said Warren, who is a professor at Harvard Law School. Billions of taxpayer dollars will be spent and families will nonetheless lose their homes." [11]

Articles and resources

Related SourceWatch articles


  1. 1.0 1.1 Congressional Oversight Panel, October Oversight Report: An Assessment of Foreclosure Mitigation Efforts After Six Months (Oct. 9, 2009), (PDF).
  2. Ted Gayer, "The Latest Data on the Home Affordable Modification Program,", "Brookings" April 16, 2010.
  3. Id.
  4. Shahien Nasiripour, "HAMP Update,", "Huffington Post," May 17, 2010.
  5. Id.
  6. Shahien Nasiripour, "Average Homeowner In Obama Foreclosure Program Deeply Underwater,", "Huffington Post," July 7, 2010.
  7. Id.
  8. Shahien Nasiripour, "Less Than One Percent of Modified Mortgages In Obama Foreclosure Plan Involve Principal Cuts,", "Huffington Post," June 23, 2010.
  9. Dan Nunley,"Elizabeth Warren Says Obama's Foreclosure Aid Program,", "Bankruptcy Blog," April 16, 2010.
  10. Id.
  11. Id.

External resources

External articles