There is nearly $22 billion of untapped funding available for the Treasury’s Making Home Affordable program, along with another $3.4 billion available for the Hardest Hit Funds Program, according to the Special Inspector General for the Troubled Asset Relief Program’s quarterly report.
Funds originally obligated for all TARP housing programs totaled $45.6 billion, which Treasury has only spent $12.8 billion of.
“Treasury should improve coordination between these programs so that they work together as seamlessly as possible to provide effective, sustainable mortgage relief to as many struggling homeowners as possible,” the report said.
Only 1 in 6 homeowners that applied for HAMP received a permanent modification, totaling to 1.4 million homeowners.
But despite the lack of participation, HAMP faces a significant challenge of borrowers redefaulting out of HAMP.
So far, 398,222 homeowners have not been able to keep up with their mortgage payments even though payments were lowered by HAMP, with 29% of homeowners in HAMP already falling out of the program.
Meanwhile, the future does not look too much brighter for HAMP.
Freddie Mac reminded mortgage servicers in April that interest rates on some HAMP rescues are about to start to tick higher.
After five years, the rate on HAMP loans began to tick up 1% until reaching its previous rate before modification.
"If it was reset to 2%, it will go up 100 basis points this year to 3%, and to 4% next year," said Robert Kimble, senior director of mortgage servicing policy at Freddie Mac.
"Hopefully the borrowers are aware of the reset," he added. "Though, the fear is there will be some recidivism."