Principal reduction is something that has been spoken about,
but how many borrowers really get to take advantage of that?
The Obama administrations claimed that just in February, 70%
of mortgages that were non-GSE loans that were eligible for a principal
reductions through HAMP, Home Affordability Mortgage Program, included
principal reductions as a part of the modification.
The US Treasury found
that since 2009 and the conception of the Fed’s Making Homes Affordable
Program, there have been over 1.5 million modifications have been filed. Although that may seem like a lot,
according to HAMP only 1.1 million have been given a permanent loan
modification in this span.
Of those permanent mortgage modifications, the Treasury reported
an average saving on a first mortgage the homeowners was around $550 a
month. The entire program has saved
homeowners a total of $18.5 million in payments.
There were also over 107,000 borrowers that saved an average $155
per month with principal modifications to the 2nd mortgage. The contribution of short sales and deed in
lieu of foreclosure (voluntary foreclosure) allowed many homeowners to side
step large amounts of mortgage debt through the HAFA program.
All in all it seems as though these programs, however frustrating
the process can be, are making efforts to keep more people in their homes.