This fall, about 30,000 borrowers will see their HAMP-reduced rates spike by a full percentage point, then rise each year until they reach the current market rate, according to a CNBC report.
The average HAMP borrower will see about a $200 increase in monthly payments after three years, according to CNBC. But some borrowers living in more expensive areas like California could see monthly payment increases running over $1,000.
“This is something that is going to blindside a lot of people," Bankrate.com's Greg McBride told CNBC. “This was ‘extend and pretend,’ no question about it. This was never designed to be something that solves the problems.”
But Treasury officials say they’ll be keeping an eye on the program as it winds down.
“If we see this leading to much more hardship than we expect right now for homeowners, we're going to be dynamic in our policy response,” Assistant Treasury Secretary Tim Bowler told CNBC. “We're not going to get behind the curve on this.”
About 1.2 million people have taken advantage of the government’s Home Affordable Modification Program (HAMP) since the program launched in 2009, most of them seeing significant drops in their interest rates. But now the program is about to expire, and many of those people will see their monthly mortgage payments spike.