1. DTIs of HAMP Modification Recipients

    Because I have become very much a financial hardass in my old age, I’ve been against FedGov’s HAMP program from Day One. (To show that I am an Equal Opportunity Hardass, I am virulently against taxpayer funds going to banks or other corporate entities, as well.)

    Still, I keep up with HAMP results (or lack thereof) because train wrecks this large are just hard to ignore. And also because watching FedGov throw piles of good money after bad is better entertainment than most primetime TV (which isn’t saying much).

    So here we go with the July batch of HAMP results:

    Financialstability.gov: HAMP Servicer Report — July 2010

    In particular, I’d like to call reader attention to a chart on page three:

    Aside from the inherent irony in finding numbers like this at a site called “financialstability.gov,” and ignoring the brazen injustice done by allowing any U.S. dot-gov entity to even use said domain, you have to be amazed — really amazed — at the financial condition of HAMPsters at large.

    With Numbers This Bad…

    What we see here is that for folks who’ve had their mortgages modified via HAMP, the median debt-to-income (DTI) ratios are downright scary.

    Think about this: The median back-end DTI for successful HAMP applicants, before their mortgages were modified, was almost 80 percent.

    After mod, the median back-end DTI is still almost 64 percent.

    So, at the median, having 64 percent of their pre-tax income going to debt payments is an improvement.

    And since part of HAMP qualification is supposed to focus on whether or not the borrower actually has a shot at staying in the house, presumably making payments to the bank from now until pigs fly, then you have to wonder just how bad the non-approved applicants’ DTIs are. (Almost half of the people who’ve applied to HAMP have been bounced from the program, for various reasons.)

    If having a 60+ percent back-end DTI after a modification is seen as “affordable,” then I probably don’t want to what “unaffordable” is.

    Yeah. Mortgage modifications or not, these are still defaults looking for a place to happen.

    Get Ya Some

    I’d step up to the trough and request a modification for myself — hey, who doesn’t want a “more affordable” mortgage PLUS the opportunity to stick somebody else with the bill? — but somehow I doubt that my front- and back-end DTIs of roughly ten percent would allow me to qualify for any sweet HAMP action. (Since I have no non-mortgage debt, both of my DTIs are equal.)

    Darn the bad luck, anyway. Savers and responsible folk? Shut out from reaping taxpayer largesse once again.

    Instead, we just get to pay for it.

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