Posted on Monday, November 22, 2010
Fewer than 500,000 homeowners have received loan modifications through the federal government’s headline foreclosure prevention program and are current on their new mortgage payments since the initiative was launched in March 2009.
Critics of the administration’s Home Affordable Modification Program (HAMP) point to the fact that over the same period, over 5 million homes received a foreclosure filing and nearly 2 million have been repossessed.
Treasury’s released new data Thursday on HAMP’s progress so far. Trial mods transitioning to permanent status have been averaging about 37,000 for the past six months, but during the month of October, only 23,750 permanent modifications were granted.
Since June, servicers have reported an average of 23,000 new trial starts as they implemented fully verified document collection. Treasury says of active trial modifications, 69,000 have lasted at least six months, down from more than 266,000 at the beginning of the second quarter of 2010.
Treasury has required all servicers to develop action plans to resolve the backlog of aged trial mods, many of which may not make it to permanent status if the track record holds true. More than half (719,487) of the 1,395,543 trial plans started have been canceled .
Rep. Maxine Waters (D-California) is chair of the House subcommittee on Housing and Community Opportunity. At a hearing Thursday to examine the industry’s problems with foreclosure documentation errors, Waters lashed out at the Treasury for not flexing its power to force lenders to do more to restructure troubled loans.
Waters has introduced the Foreclosure Prevention and Sound Mortgage Servicing Act (H.R. 3451), which would prohibit a bank from initiating foreclosure proceedings without first offering the homeowner some form of loss mitigation.
Many have called HAMP’s results disappointing, but administration officials stand by their claims that the program has served as a roadmap for the industry that has led to more proprietary and sustainable modifications by servicers. They also assert that HAMP is but one weapon in the government arsenal to fight foreclosure and that the full spectrum of housing policies have helped bring stability to a very challenging housing market.
Since the current administration’s housing recovery efforts began, officials say record low interest rates have helped more than 8.3 million homeowners to refinance, resulting in more stable home prices and $15.2 billion in annual savings for borrowers.
According to the housing scorecard published by HUD Thursday, even though home sales have fallen off since the expiration of the homebuyer tax credit, home prices remained level in the past year after 33 straight months of decline. By HUD’s calculations, homeowners added $95 billion in home equity in the second quarter of this year alone.
HUD’s data also shows that between April 2009 and the end of August 2010, more than 600,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions were made, and nearly 1.8 million proprietary mortgage modifications were completed under HOPE NOW’s guidance.
By: Carrie Bay