Mortgage Crisis: The Stomach Churning Failure that Is HAMP
Calculated Risk has been crunching numbers again. These are really dismal. People who were SUCCESSFUL in getting HAMP modifications have an median income to debt ratio of 79.9.
That means that AFTER getting mortgage modification 67% of that family’s gross income went to debt service. That’s before you paid the utilities, before you bought the groceries ,before you have paid for transportation to work, before you spent the legally mandated 9.4% of your income on health insurance.
So let’s do some math:
Family of 4, gross income of $50K
– 33,500 (67% for debt service)
– 4,700 (9.4% for health insurance)
– 6,500 (FICA 13%)
– 7,000 (food using USFDA #)
Whoops = -1700!
That’s a negative integer! and we still have not paid any income tax or spent any money of travelling to work to earn that $50K or paid any utilities. Sorry, no lights or heat for you.
Can any sentient being continue to make the argument that HAMP is a worthwhile program? Really now. We need a meaningful and SUSTAINABLE mortgage modification program that writes down principle amounts to reflect current market prices. This will put a floor under the housing price collapse and stabilize neighborhoods as well.
This is not rocket science, it’s simple math.
[Earlier posts in this series and related links at FDL’s Foreclosure Fraud Resources]