HAMP on Track to Reach Goals. No Update On Redefault Rate

by devteam November 10th, 2009 | Share

The Treasury Department announced Tuesday morning that its Making HomernAffordable Program (HAMP) now has more than 650,000 mortgage modificationsrnunderway, a number that puts it on track to meet its goals over the next fewrnyears.

The report, which provides data on the program through October 31, isrnthe first to provide state specific numbers on program participation.

The numbers of trial modifications processed through the program hasrnincreased dramatically each month since the program's inception early lastrnspring.  At the end of May only 50,130rnborrowers were in the program; by the end of September the total was 487,081rnand at the end of last month there were 650,994 loans in process.

Slightly more than 900,000 borrowers have been offered trial plansrncompared to 758,000 last month and servicers have sent out 2,777,000 requestsrnfor financial information to eligible borrowers.

While the number of borrowers the program is helping has dramatically increased over recent months, the effectiveness of the program is dependent upon the ability of borrowers to maintain a stable payment history after their loan is modified. Unfortunately the Treasury has yet to provide an update on the re-default rate amongst trial modifications.

Every state in the union has borrowers participating in the programrnwith the most activity, as might be expected, in those states which experiencedrnthe greatest run-up in both home sales and in prices during the boom andrnsubsequently have suffered the most foreclosures.  California leads the list with 134,609rnmodifications in process followed by Florida with 82,614, Arizona (34,424),rnIllinois (33,514) and New York (27,773). rnThe report did not give a state by state breakdown of modifications as arnpercent of eligible loans which would have been a more meaningful figure thanrnthe raw number.

The number of servicers now participating in the program has reachedrn71.  These servicers cover 85 percent of HAMPrneligible mortgage debt in the country. rnParticipating servicers oversee loans owned or guaranteed by Fannie Maernor Freddie Mac, loans held in portfolio, or loans serviced by other investors.

In addition to the 71 servicers mentioned above, another 2,300 lendersrnservice loans owned or guaranteed by Fannie Mae or Freddie Mac.  These servicers are automatically eligible tornparticipate in the program.

During October Saxon Mortgage Services had the highest percentage ofrnits 60-day delinquencies in the modification program, 44 percent.  Citibank was second with 40 percent ofrneligible borrowers participating. 

HAMP has a goal of placing three to four million homeowners into arnmodification program over three years. rnIncentives are offered to servicers for implementing the program which employesrnseveral different mechanisms for lowering mortgage payments to not more than 31rnpercent of the borrower's monthly income <pIn releasing the report Treasury Assistant SecretaryrnMichael S. Barr said "As this report demonstrates, struggling homeowners inrnevery state now benefit from reduced monthly mortgage payments and have anrnopportunity to stay in their homes.  Thernprogram is having a pronounced impact in areas particularly hard hit by thernhousing crisis.  We're reaching borrowersrnat a larger scale than any other modification program to date, but there isrnstill much more work to bedone.

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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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