By Brenda Flanagan
“A lot of sleepless nights, a lot of sleepless nights, trying to find a way to get the mortgage paid and brought back up to date,” explained John Smith.
After Smith lost his job, he almost lost the home he’d lived in for 30 years here on South Burnett Street in East Orange. Desperate to avoid foreclosure, Smith hired attorney Bruce Levitt and applied to the federal Home Affordable Mortgage Program, or HAMP, for lower payments. He qualified.
“My heart stopped aching. Then I could break the news to my family that, you know, everything was going to be secure,” said Smith.
“I would always pre-screen every client to see if they could afford to make a mortgage payment. John was one of those people and I had dozens of other people just like him,” said Levitt.
He says HAMP helped perhaps one out of three clients who needed mortgage help. Nationally, 1.7 million people lowered their mortgage payments with HAMP — almost 125,000 of them in the New York, New Jersey and Pennsylvanian metro area. But almost 800,000 modifications got cancelled. The program, announced by President Obama in 2009 as a response to the mortgage crisis, will expire Dec. 31. In the end, it was only as good as the loan providers that processed the applications.
“We’d apply, we would be turned down. We’d apply again, we’d be turned out. And in the process of applying — as in John’s case — we’d submit paperwork, they’d lose the paperwork. For many people that I believe should have gotten modifications, I don’t think its worked very well at all. The whole system has been flawed from day one,” explained Levitt.
In November, New Jersey showed more than 65,000 homeowners were behind in their mortgage payments. One in every 597 New Jersey households with a mortgage had some sort of foreclosure filing and Jersey leads the nation with a 5.79 percent foreclosure rate, compared to a national rate of .30 percent. Analysts say HAMP probably couldn’t rescue many of these long-delinquent properties, anyway.
“Likely they have either tried a modification program or they just didn’t qualify,” said RealtyTrac‘s Darren Blomquist.
He says that’s why New Jersey will see an uptick in foreclosure auctions next year.
“So properties that have started foreclosure and been in foreclosure for some time,” said Blomquist. “But now finally the banks are pushing those through and scheduling the foreclosure auctions and the judges are agreeing to that. An indication all the methods to avoid foreclosure have been exhausted.”
Which could mean more empty homes in cities like East Orange, which is struggling to manage 600 vacant properties. Happily, Smith’s is not one of them because of HAMP.
“I felt it was one of the best programs under the Obama Administration that was able to help people,” said Smith.
HAMP will be replaced by a new federal assistance program called Flex Modification. But that will only apply to government backed mortgages, like Fannie Mae and Freddie Mac. For everyone else, the window of opportunity is closing fast.