Image by TheTruthAbout… via Flickr
New data was released on 9/22/10 by Treasury and HUD on the Home Affordable Modification Program (HAMP). Just over 33,000 homeowners received a PERMANENT HAMP modification in August, 2010. This figure is down 27% below the number of PERMANENT HAMP modifications in July, 2010.
The borrowers whom received the PERMANENT HAMP modifications have seen their mortgage payments drop by a median of 36%, or more than $500 per month. Homeowner’s who received these modifications saw their housing expenses fall from 45% to 31% of their monthly income.
In August, 2010, 26,628 TRIAL HAMP modifications were added to the HAMP roster. Currently there are 202,521 active trial modifications. Federal officials are pushing the loan servicers to make decisions for borrowers who have completed the trial phase and either drop them from the program or make them permanent modifications.
The Treasury stated that the most of the cancellations are due to insufficient documents received or missed or late trial payments. In addition, if their principal housing expenses are already less than 31% they do not qualify for the program.
Nearly 31,000 borrowers with Fannie Mae (FNMA) and Freddie Mac (FMCC) loans forfeited their homes through a short sale or deed-in-lieu of foreclosure during the 2nd quarter of 2010. This is a 27% increase over the 24,000 transactions completed during the 1st quarter of 2010.
During the same period last year there were 11,700 transactions up from 3,000 the year before.
Federal Housing Finance Agency (FHFA) also reported that loan modification and refinancing by FNMA and FMCC were up in the second quarter. The Home Affordable Modification Program (HAMP) increased 65% while refinancing under the Home Affordable Refinance Program (HARP) increased by 30%. Loan servicers completed 171,200 permanent loan modifications on these types of loans thru HAMP and nearly 88,600 borrowers in HAMP trials transitioned to permanent modifications bringing the two companies HAMP numbers to nearly 225,000. FHFA’s report also stated that approximately 202,000 of the borrowers were in a HAMP trial period at the end of the 2nd quarter, compared to nearly 448,100 at the end of the first quarter. That means minus the 88,600 permanent modifications 157,500 homeowners’ HAMP trials were cancelled as a result of missed payments or inadequate documentation.
FHFA also noted that more than ½ of the modifications completed in the 2nd quarter lowered borrowers’ monthly payments by more then 30%. During this same period the two companies initiated 275,100 new foreclosures, an increase of 12%. Completed foreclosure sales and 3rd party sales totaled 112,400, up 15% from the previous quarter.
The U.S. Treasury released statistics the end of July, 2010 for the Home Affordable Modification Program (HAMP) program. The statistics showed that loans that have been permanently modified had a re-default rate to be around 2% – 5.9% 60 or more days past due after modification and 1.7% 90 or more days delinquent. When those statistics came out, they received a huge outcry from analysts questioning the validity of these statistics.
The Treasury pulled the numbers and re-evaluated the statistics after retaining a third-party consultant to provide independent validation. A few weeks later, they corrected the re-default assessments as follows: 10% of six month old permanent modifications are 60+ days delinquent and 6% are 90+ days delinquent.
Analysts say that’s still too low and the rates will surely go higher the longer the program is in place. Up until six months ago, permanent modifications had been offered to only about 434,716 borrowers. The Treasury has cancelled the temporary modifications of 616,839 borrowers.
The analysts at Barclays are predicting a 60% re-default rate and Fitch Ratings projects 55-75%.
http://www.dsnews.com/articles/print-view/treasury-corrects-its-math-for-hamp-redefaults-2010-08-12
Realty World A+ Facebook Page