In the Real Estate Industry, whether you're an agent, broker, or loan officer, you've heard of "Loan Mods". 'Home Affordable Modification Program' otherwise known as HAMP, is the government program for helping hard-hit homeowners avoid foreclosure is encouraging strategic defaults. Loan Modifications made through HAMP are based on the home owner's first lien debt, not OVERALL debt. So even when lenders modify first mortgage debt to 31% of income, many borrowers continue to carry unmanageable debt-to-income ratios. The result too often is borrowers defaulting in order to qualify for a short sale or federal assistance. Asset Management giant BlackRock Inc. is shopping a proposal in Congress to replace HAMP with a temporary type of bankruptcy that requires subordinate debt to be eliminated first.
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