February Housing Scorecard Details Fragility of Market


The February edition of the Housing
was released by the Departments of Treasury and Housing and Urban
Development (HUD) on Friday.  In what has
become a monthly litany, it said that “the housing market is strengthening
although the recovery remains fragile.” 

Scorecard is essentially a summary of data on housing and housing finance
released by public and private sources over the previous month and/or
quarter.  Most of the data such as new
and existing home sales, permits and starts, mortgage originations, and various
house price evaluations have been previously covered by MND. 

piece of new information was data on the progress of the housing overhang.  Inventories of existing homes for sale have
continued to improve over the last two quarters, declining from 3.2 million in
the second quarter to 2.4 million in the fourth quarter.  Housing units held off the market have
declined modestly, from 3.9 million in the first quarter of 2011 to 3.6 million
in the fourth quarter.

The scorecard incorporates by reference
the monthly report of the Making Home Affordable Program (MHA) through the end
of December.  This includes information
on the universe of MHA programs including the Home Affordable Modification
Program (HAMP), HOPE Now, and Second Lien Modifications and other initiatives.  This month it also includes results of the most
recent quarterly mortgage servicer assessments.

For the first time since the Federal
Housing Finance Agency began the servicer assessments in an attempt to make
HAMP more responsive and effective there were no servicers found to be in need
of substantial improvement on any of a laundry list of metrics measuring their
performance.  These evaluation measures
include the rate of conversions from trial to permanent modifications, missing
paperwork, and data errors.  In previous
quarters JPMorgan Chase and Bank of America were found to have deficiencies
serious enough for HAMP to withhold incentives for their performance.  With the recent assessments, HAMP has
released those withheld funds.

Of the nine major servicers now
participating in HAMP (Litton’s portfolio has been assumed by Ocwen Loan
Servicing) seven were found to need moderate improvement* and the remaining
two, OneWest Bank and Select Portfolio Service, to need minor improvement.   

Assistant Treasury Secretary Tim
Massad said about the servicer assessments, “The Making Home Affordable Program
has established critical standards that have changed the mortgage industry for
the better, and the assessments have been a principal tool for measuring that
progress. By shining the spotlight on key practices, we have prompted servicers
to improve their implementation of the Making Home Affordable Program. 
However, there is still more work to be done to ensure that the industry treats
all borrowers properly.  The implementation of the broader standards
required by the settlement, [with servicers linked to 5 major lenders] together
with our continued compliance efforts, will help bring this about.”

Since the December HAMP report 16,759
new trial modifications have started for a total of 1,791,354 since April
2009.  On-going trials now number 76,343
and there are 768,773 active permanent modifications.  Since the last report 17,992 trial
modifications were converted to permanent status.

Treasury has been putting a lot of
emphasis on principal reduction programs in the last few months.  HUD maintains that the principal balances of Fannie
Mae and Freddie Mac loans cannot be reduced, but extra incentives have been
offered to servicers who reduce principal as part of the Principal Reduction
Alternative (PRA) under HAMP.  There have
been 67,835 PRA trial modifications started and 47,114 that have become
permanent to date, 44,058 of which are still active.  The median principal reduction among those
current active modifications is $68,063.

Loans modified with a PRA feature had a
median loan-to-value (LTV) before modification of 159 percent and 115 percent
post modification.  All loans modified
through HAMP had a median of 120 percent LTV before modification and 122
percent after.

Another HAMP program, Home Affordable
Foreclosure Alternatives (HAFA) offers homeowners the option of exiting
homeownership through a short sale or deed-in-lieu of foreclosure.  To data almost 50,000 borrowers have
requested this alternative and 31,426 have completed a HAFA transaction, all
but 850 of them through short sales.

*In addition to Chase and Bank of
America servicers needing moderate improvement are American Home Mortgage
Servicing, CitiMortgage, GMAC, Ocwen, and Wells Fargo Bank

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