HAMP Modifications Begin to Flag

Servicers completed only 25,400 HAMP modifications in August — the lowest number of monthly completions this year, according to new figures released by the Treasury Department.

However, 3,745 of those borrowers who qualified for the government’s Home Affordable Modification Program also benefited from a reduction in the principal amount of their mortgage.

The Treasury Department pays incentives for servicers to make principal reductions when a borrower has a non-GSE mortgage with a loan-to-value ratio of 115% or greater.

So far, 10,780 borrowers have received principal reductions since the ‘Principal Reduction Alternative’ initiative was launched in October 2010.  The median principal amount reduced is $67,850 or 30% of the loan amount.

HAMP servicers also receive incentive payments for modifying second liens and to use short sales (and deed in lieu transactions) as foreclosure alternatives.

The August HAMP report shows that JPMorgan Chase completed nearly 6,500 short sales — the most of any HAMP servicer– followed by Wells Fargo Bank with 4,225.

Meanwhile, servicers have modified or partially extinguished 36,500 second liens.  Another 3,650 second liens have been fully extinguished. Bank of America has been the most aggressive HAMP servicer when it comes to second liens.

B of A has fully extinguished 1,600 second liens while modifying 15,100.

JPMorgan Chase has modified 5,660 second liens.  But it has not fully extinguished one second lien as a HAMP servicer.

The average amount of a fully extinguished second lien is $68,000, according to the Treasury report.

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Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_447/hamp-modifications-flag-1026864-1.html

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