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Texas foreclosure: Federal distressed mortgage help extended

At the height, or rather the depths of the most recent recession, when the housing market tanked, the federal government launched the Home Affordable Mortgage Program, or HAMP. The objective was to encourage lenders to do the right thing and help homeowners in Texas and the rest of the country who suddenly found themselves in financially underwater homes bail out.

The plan was that as many as 4 million homeowners would be helped in avoiding foreclosure and bankruptcy by the funneling $30 billion federal dollars into the system. The idea was to incentivize mortgage lenders to adjust loans so that monthly payments of eligible owners would top out at 31 percent of monthly income. The chief beneficiaries were expected to be underwater mortgage holders and people who lost jobs.

It didn't quite work as expected. Many financially distressed families found debt relief through bankruptcy and foreclosure. And that's a situation that hasn't disappeared. Many continue to be faced with such challenges, but may fear even exploring the option, misguided by the notion that it somehow reflects their failure, rather than the economy's.

Indeed, only slightly more than 1 million ended up getting the HAMP assistance they were entitled to, according to the Treasury Department. The relief those individuals received reportedly was, on average, better than they might have gotten by trying to pursue modifications privately, but it was still far short of what the Obama administration had intended.

That is apparently why the government has announced that the program is being extended. It had been slated to shut down at the end of this year. But officials at Treasury and the Department of Housing and Urban Development announced last week that the Making Home Affordable program (which encompasses HAMP) will now run through 2015. Officials won't say how many modifications they hope to engineer with the extension, but they say it's clear that many homeowners continue to struggle and can use the help.

Source: The New York Times, "Federal Program for Distressed Homeowners Is Extended," Jackie Calmes, May 30, 2013

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