On April 14, 2010, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) released an update on the Administration's nationwide campaign to help borrowers in the trial phase of their modified mortgages convert to permanent modifications under the Home Affordable Modification Program (HAMP).
As of the end of the month, more
than 1.4 million homeowners received offers for trial modifications, and
more than 1.1 million borrowers were receiving a median savings of $500
Permanent modifications have been granted to more than
230,000 homeowners, and an additional 108,000 permanent modifications
have been approved by servicers and are pending only borrower
HAMP was designed to offer through 2012 up to 3-4 million homeowners reduced monthly mortgage payments that are affordable and sustainable over the long-term.
Graphic: New York Times - April 14, 2010
Unfortunately, the number of homeowners who defaulted on their mortgages -- even after securing cheaper terms through the government's modification program -- nearly doubled in March, continuing a trend that could undermine the entire program.
- Sixty percent of modifications undertaken by banks in late 2008 were in default a year later, according to the latest Mortgage Metrics Report compiled by the Office of Thrift Supervision and the comptroller of the currency.
Making Home Affordable Program
Servicer Performance Report - March 2010
Over 230,000 Homeowners Granted Permanent Modifications
- More than 230,000 total permanent modifications have been granted to homeowners, who are guaranteed lower payments for five years.
- In addition, more than 108,000permanent modifications have been approved by servicers and are pending borrower acceptance.
Over 1.1 Million Trial Modifications for Homeowners
- More than 1.1 million trial modifications have begun under the program.
- 57,000 new trial modifications were added in March, down from 72,000 in February, reflecting servicers increasingly requiring upfront documentation from homeowners to comply with pending HAMP policy requirements.
- Borrowers realize immediate relief with the first trial payment.
- More than 1.4 million homeowners have received offers for trial modifications.
- Of the 1 million borrowers in active modifications (trial and permanent), more than 227,000 borrowers are in permanent modifications.
- The lower monthly mortgage payments for homeowners in HAMP represent a cumulative reduction of over $3 billion.
Servicers Making Progress on Trial Modification Decisions
- Over 60,000 trial modifications converted to permanent modifications in March, an increase of almost 15% from the nearly 53,000 in February.
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An indicator of excessive defaults and claims is the FHA Compare Ratio statistic. When a Compare Ratio is above 150, HUD begins a due diligence process.
Mortgagees with a Compare Ratio of greater than 200 are subject to disciplinary review, termination of underwriting authority, and possible loss of FHA mortgagee approval.
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Making Home Affordable Program
Servicer Performance Report Through March 2010
April 14, 2010
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