A segment of New Yorkers who use a federal program to temporarily lower their mortgage payments could again find themselves at risk of default, industry experts have said.
The Home Affordable Modification Program, initiated in 2009, lowers the interest rate on home loans for five years.
But with the five-year period coming to an end for many HAMP participants — and with household incomes barely rising over that time — many homeowners will again be expected to pay interest rates they can’t afford.
“From the beginning, it was very evident this was going to be a problem,” said Greg McBride, the chief financial analyst for Bankrate.com, told the New York Times. “HAMP was only ever designed to kick the can down the road.”
Homeowners in the program will see their interest rates gradually rise by up to 1 percent annually until they hit the national average at the time of the modification, the Times noted. HAMP participants in New York will see a median payment increase of an estimated $286 a month, according to the article. Congress has been skeptical since the program’s inception, which has only seen modest success, according to reports. [NYT] – Angela Hunt