HAMP Report: Few Loan Modifications Made Permanent

by devteam December 11th, 2009 | Share

The Treasury Department releasedrndata Thursday on activity in its Making Home Affordable (HAMP) program duringrnthe month of November.  As expected fromrnearlier comments made by Treasury officials, borrowers continued to enter thernprogram under trial modifications, but the rate of permanent modificationsrnremains well below expectations.

Cumulative figures for thernprogram by the end of November show participating servicers had sent a total ofrn3,137,548 requests for financial information to borrowers thought eligible forrnthe foreclosure prevention program and had extended 1,032,827 invitations tornparticipate in a trial modification program, up from 920,000 in October. 

There are currently 728,408 borrowersrnactively participating in loan modifications, however, only 4.3 percent ofrnthose modifications, or 31,382, have been converted to permanentrnstatus.

The HAMP program involves 78rnservicers who manage approximately 85 percent of eligible mortgage debt in therncountry.  These servicers are paid anrnincentive by the Treasury Department for enrolling troubled borrowers in thernprogram and completing loan modifications. rnThe workouts must lower borrower payments to a maximum of 31 percent of thernborrowers' monthly income.  It isrnestimated that homeowners who are enrolled in the program have saved an averagernof $550 per month on their mortgage payments.

GMAC has been the most successfulrnservicer in converting trials to permanent modification status with 7,111rncompletions.  J.P. Morgan Chase and OcwenrnFinancial have each converted around 4,300 loans.  Some servicers have completed no conversionsrnand one or two have not enrolled even one borrower in trial programs.

The number of trial modificationsrnin November rose nearly 11 percent over October's figure of almost 660,000 butrn30,650 of the modifications started in the seven months since the program gotrnoff the ground are no longer active. rnThis is roughly the same number as have moved into permanent status.

In a writtenrnreport to the House Financial Services Committee earlier this week, AssistantrnTreasury Secretary Herbert Allison warned that performance figures would berndisappointing.  He said that, while most borrowers in trial programs are current on their payments, servicersrnblame the lack of conversions on missing documentation from borrowers while thernborrowers and mortgage counselors assisting them are complaining that servicersrnare mishandling and losing data that is submitted   He told the committee that Treasury is movingrnto improve the conversion figures by working more closely with servicers, withholdingrnincentive payments until conversions are complete, and improving the HAMPrnwebsite to make it easier for borrowers to comply with program requirements.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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