Overseen by the Treasury Department and funded by the Troubled Asset Relief Fund, HAMP was launched in 2009 to prove relief to a wide swath of homeowners facing foreclosure in the wake of the housing bust. The program is designed to lower monthly mortgage payments for distressed borrowers by either reducing interest rates, delaying payments, slashing loan balances or using some combination of the three.
The results of a ProPublica questionnaire in the summer of 2010 suggested that many distressed borrowers have had experiences similar to the Ugaros' in attempting to qualify for HAMP. Two-thirds of respondents to the questionnaire who indicated that they were denied HAMP modifications said that they were given "different or conflicting reasons" for why they didn't qualify.
Alys Cohen, a staff attorney at the National Consumer Law Center, said widespread mishandling of applications has plagued HAMP since it's launch in spring 2009. While many HAMP denials are merited, many others are a result of mortgage servicers' mistakes, and those servicers aren't subject to fines for flouting HAMP guidelines, Cohen said.
"Until people can protect themselves directly in real time, servicers are not going to follow the rules," and relief to homeowners will not flow as it should, she said.
Since the Obama administration introduced HAMP -- which had reduced monthly mortgage payments by a median amount of $534.98 as of April 2012 -- only about 1 in 4 applicants have received a permanent modification.
According to the Government Accountability Office, 2.8 million have had their applications deniedor their trial modification canceled. To date, a little more than 1 million have received a permanent modification -- but the program was aiming to have helped 3 to 4 times that.
Despite Rejections, Glimmers of Improvement
Despite a record of bungling HAMP applications, servicers still appear to have made strides in implementing the program over the last two years. Ironically, the Ugaros' experience points to some of them.
Anthony Ugaro, who worked at an Army hospital during the Vietnam War, said that he only had to wait eight weeks for written denials to his applications from Wells Fargo. That's a big improvement from ProPublica's finding that homeowners waited an average of 14 months to learn if they'd qualified for HAMP. (Two-thirds of those ultimately rejected said that they never received written denials, according to the ProPublica survey.) A servicer is required to send a rejected borrower a written denial under HAMP program guidelines.