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                                              April Loan Modification Report:
                                                      Is HAMP Failing?
                                            Want To Stop Mortgage Defaults?



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On Wednesday of this week, we informed you of the issuance of April's data for the Administration's Home Affordable Modification Program (HAMP). A careful reading of the document indicates that HAMP may not be succeeding. We thought the following graphic would be helpful.

Please visit our Library to download the April data.
  • Number of permanent loan modifications: 299,092.
  • Number of trial modifications canceled:  277,640.
  • Number of "active trials": 637,353.
  • Number of trial modifications started over the last seven months: 660,000.
According to Calculated Risk, this data "suggests that the HAMP trial period is about 7 months!"

Clearly, the trial portion of the loan modification process is taking far longer than the three-month period it is designed to last. Indeed, it appears that, more often than not, borrowers aren't surviving the trial modification stage.

In effect, the April Report shows the number of failed loan modifications trials is nearly as great as the number of successful ones.

Furthermore, a month-over-month comparative analysis indicates that  the number of "All Trials Started" is decreasing steadily, along with the number of "All Permanent Modifications Started."
HAMP 4-10

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Making Home Affordable Program - Servicer Report April 2010 (05/17/10)
CRTFStop Mortgage Defaults

Task Force designed to reduce high compare ratios
caused by excessive defaults and claims.

Task Force Description
  • Staffed with subject matter experts
  • Specially designed forensic audits
  • Automated file screening systems
  • State-of-the-art research facility
  • Scalable up to any size default experience
  • Upload large file formats for prompt reviews
  • Secured and safe audit location
Our Remedy
  • Comprehensive review of existing defaults and claims for loss mitigation  and loan modification eligibility
  • HUD-FHA and regulatory compliance guidance for the mortgagee
  • FHA and conventional Early Payment Defaults resolution strategies and loss mitigation methodologies
  • Mortgagee notification of borrower's loss mitigation eligibility
  • Borrower notification of loss mitigation eligibility
  • Expert, nationwide legal counsel to handle loss mitigation and loan modification strategies
  • Monitoring of loss mitigation applications in process
  • Follow-up with servicers to assure proper and timely resolution and notification to HUD-FHA
  • Loss mitigation resolution of new defaults and claims

The Compare Ratio provides a value that reveals the largest discrepancies between the mortgagee's default and claim percentage and the default and claim percentage to which it is being compared.

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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