HAMP Winding Down. Loan Modification Metrics Decline in October

The November Housing Scorecard issued jointlyrnby the Departments of Housing and Urban Development (HUD) and Treasury isrnnotable mainly for its data on the apparent winding down of the Making HomernAffordable Modification Program (HAMP). rnAll metrics for the program were lower during the latest period (October 10) than in the period ending in September.</p

The number of borrowers entering trialrnmodifications dropped to 26,100 from 35,300. rnAn average of 23,000 new trials began each month in the second half ofrn2010 and a total of 1.4 million trials have started since the program began inrnApril 2009. 719,487 or 51 percent of the trials have been canceled.</p

Moving borrowers from successful completion ofrnthe required three-month trial period to permanent modification status has beenrna persistent problem and program administrators have revamped projectrnguidelines and stepped up monitoring several times in an attempt to speed uprnthe process.  At present there are stillrn69,000 borrowers who remain in trial status after six months or more comparedrnto the 266,000 borrowers who had been lingering in trials at the beginning ofrnthe second quarter.  The pace ofrnconversions picked up after the government intensified its role and an averagernof 37,000 conversions a month or 222,000 out of the total of 519,600 conversionsrnhave occurred in the last six months. rnMuch of that improvement, however, occurred in the first two months ofrnthat period and the pace has again slowed.  During the most recent reporting period, conversionsrndropped to 24,000 compared to 27,800 the previous month.</p

Active permanent modifications now total 483,342;rn36,306 permanent modifications have been canceled since the program began.</p

HAMP had an original goal of helping three tornfour million homeowners but is apparently destined to fall far below that goalrnalthough program officials maintain that over 40 percent of borrowers who fellrnout of the HAMP program received other modification assistance from servicers. </p

Alan Zibel reporting on a House subcommitteernhearing for Dow Jones Newswires said that Rep. Maxine Waters (D-Calif.) urgedrnthe government to be more aggressive in penalizing lenders who have notrndone a good enough job of modifying loans. “There have been no monetary penaltiesrnand no sanctions,” she said.  But PhyllisrnCaldwell, head of the Treasury’s homeownership preservation office, toldrnZibel that the government does not have the ability to fine mortgage servicers. rn</p

Modifications through HOPE Now increasedrnslightly, from 115,800 in the previous period to 119,600, but other federal foreclosurernprevention programs also appear to be slowing. rnFHA loss mitigation interventions dropped from 56,400 to 31,900 and thernnumber of borrowers counseled though various federal programs during the third quarter,rn713,500, decreased considerably from the second quarter total of 839,400.    </p

Acting Assistant TreasuryrnSecretary Timothy Massad said, “The recent reports of problems in the foreclosurernprocess underscore the importance of helping responsible homeowners avoid thernpain of foreclosure. As we implement additional program enhancements to reachrnmore homeowners, we continue to stress to mortgage servicers the importance ofrnmaking every effort to enroll eligible homeowners in HAMP and providernmeaningful alternatives to avoidable foreclosures.” </p

The Monthly Scorecard also notedrnthat an additional 1 million families refinanced their mortgages in the lastrnquarter bringing the total since April 2009 to 8.3 million. The lower ratesrnthey achieved are estimated to have resulted in $15.2 billion in annual borrower savings.

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