Homeowner Savings through HAMP top $22 Billion

Homeowners have saved an estimated $22.9rnBillion in mortgage payments through the Home Affordable Modification Programrn(HAMP) since it began in 2009.  Thernmonthly report from the Making Home Affordable (MHA) program, the umbrella underrnwhich HAMP and a handful of other foreclosure prevention programs operate, saidrnthat, as of September, the median savings on first lien payments for distressedrnhomeowners in the program was $547 per month.</p

While homeowners with mortgages owned orrnguaranteed by Fannie Mae or Freddie Mac (the GSEs) are not eligible for anyrnform of principal reduction, HAMP reductions for other investor owned loansrnhave totaled $12.1 billion over the years of the housing crisis.  Seventy-two percent of non-GSE loans receivingrnmodifications in September included a principal reduction feature.</p

MHA said that the performance of HAMPrnmodifications has improved over time.  Ofrnmodifications that have seasoned 24 months those started in 2011 have had arndisqualification rate of 24.3 percent compared to 28.6 percent a month thosernstarted in 2009.   The longer a homeowner stays in the HAMPrnprogram the more likely he or she is to keep up with their mortgage payments asrnwell.  MHA cited a report from the Officernof Comptroller of the Currency (OCC) saying that HAMP modifications continue tornexhibit lower delinquency and re-default rates than industry modificationsrnalthough no substantiating figures from the OCC report were provided by MHA.</p

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Principal reduction remains a strongrnfactor in the sustainability of loan modifications.  For example, of modifications with a monthlyrnpayment reduction over 50 percent have a disqualification rate of 16.2 percentrnat 24 months while those with a payment reduction below 20 percent re-defaultedrnat a rate of 41.7 percent.</p

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Early intervention is also an importantrndriver of modification success.  Borrowersrnwho were 31 to 90 days in arrears on their mortgages at the start of their HAMPrntrial period experienced a re-default rate over the next 24 months of 24.9rnpercent.  Borrowers whose delinquency wasrnbetween 121 and 210 days at trial start defaulted at a rate of 31.3 percent.</p

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GSE loans performed better than other HAMPrneligible loans while investor owned loans had the poorest performance.  MHA also found that the higher the borrower’srncredit score was at modification the better the loan’s subsequent performance.</p

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In thernAugust to September reporting period there were 20,655 permanent modificationsrninitiated through the HAMP program, bringing the total since the program beganrnto 1.44 million.  The 2MP ModificationrnProgram which works to modify or eliminate junior liens of HAMP eligiblernborrowers started 2,444 modifications in September for a program total ofrn119,925.  The Home Affordable ForeclosurernAlternatives Program assisted 11,816 homeowners through short sales and deedsrnin lieu for a total of 226,435, and the Unemployment Program (UP) raised itsrntotal served to 35,729 with 625 new participants.</p

The MHArnReport is included by reference in the Housing Scorecard issued monthly by thernDepartments of Housing and Urban Development and Treasury.  The Scorecard is a summary of housing relatedrnactivity for the month including home sales, home price trends, home building,rnand foreclosure related activity.  Thisrninformation was reported by MND when originally published.

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