COLE: Obama’s helping hand hoodwinks homeowners

The Washington Times ^ | March 1, 2011 | Rebel A. Cole

[rebel_yell2]

Back in March 2009, the Obama administration unveiled the Home Affordable Modification Program, or HAMP, a program for helping delinquent borrowers save their homes from foreclosure - a problem that got worse again in reports released just last week. The goal of HAMP was to “help 3 to 4 million homeowners by 2012.” This phrase should have read “help or hurt” because hurt is exactly what has happened to hundreds of thousands of homeowners who have attempted to use HAMP to save their homes.

How is it possible that a program for providing mortgage modifications could hurt homeowners? To understand this, we need only look at how HAMP has worked - in practice.

[Condor51]

2.7545 is = to 27.545% Interest

*** What on earth does that equality sign mean?***

I'll expound:

Mathematically that 2.7545 is equal to a 27.545% Interest rate, to wit:

$167,000 at 27.545% Interest equals $467,000 at the end of forty years (167K x 1.27545%)
[I included the 100k Balloon payment over the 40 years for simplicity. As one way or another it has to be paid.]

In short, they're getting screwed.

[R4nd0m]

Your intention is genuine but simple interest is resulting in a scary rate. The correct method would be based on the PV tables. A quick calculation (not detailed) says the rate should be betn 3.5 and 4 percent...

[willyd]

I don’t think you have the foggiest idea what you are talking about. The interest rate is somewhere between 5 and 5.5% on that loan depending on how much was allocated of that payment for pmi and taxes.