Interest rates on home loans that were modified under the government's Home Affordable Modification Program (HAMP) are starting to reset higher, with more than 30,000 homeowners likely to be impacted this year. Between now and 2021, nearly 800,000 participants in HAMP will see their mortgage payments go up by about $200 a month, according to a report from the office of the Special Inspector General of the Troubled Asset Relief Program.
HAMP was created to help homeowners avoid foreclosure. Many of the workouts provided lower interest rates; but after five years, the mortgages begin to reset to the prevailing rate for a 30-year fixed loan at the time of the modification. The higher costs are "a real issue that people aren't talking about," says Special Inspector General Christy Romero.
About half of the homeowners who face interest rate increases are in California, Florida, New York, and Illinois.