MarketWatch reports on a study which found Pennsylvania's Homeowners Emergency Mortgage Assistance Program prevents home foreclosures more effectively and for less money than the federal Home Affordable Modification Program.
The New York Fed study says the HEMAP program can be cheaper for taxpayers and help a large number of troubled homeowners. It compares the two approaches by evaluating costs on assistance for two hypothetical mortgages valued at $210,000 at the time of unemployment. The HAMP modification program, the report argues, costs the federal government $13,600 while the HEMAP program cost Pennsylvania $1,620.
The report said the HEMAP program can be cheaper, in part, because when the homeowner finds a job again, the loan ends and he or she begins to repay it.
Alternatively, the HAMP program provides taxpayer funded assistance to bank servicers, who, in turn, modify the borrower’s current mortgage payments, and those adjustments stay in effect for five years regardless of whether the borrower returns to employment.
Original source: MarketWatchRead the full story here.