Metrics of HAMP Continue to Improve


The Departments of Treasury and Housing
and Urban Development have released their joint October 2011 Housing
.  The report 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. 

The scorecard incorporates by reference
the monthly report of the Making Home Affordable Program (HAMP).  HAMP reports that 25,974 homeowners have
entered into HAMP loan modification trials since its last report in
September.  This brings the cumulative
number of trials begun since the program was initiated in April 2009 to
1,714,012.  Of these trials, 766,203 were
cancelled in the trial stage, 90,835 remain in trial status, and 856,974 trial
modifications have been converted to permanent status, 40,141 of these in the
last month.   A total of 720,612
permanent modifications are still active.

The program now has data on 622,271
permanent modifications
that have been in force long enough to collect at least
some information on recidivism and, as HAMP has previously stated, the
delinquency rate  continues to improve
with each generation of modifications.   As can be seen from the table below, there has
been a definite downward trend in delinquency for most loans over those in earlier
vintages after the same period of seasoning. 

Not surprisingly, there has been a
strong correlation between reduced payment and success of the
modification.  For example, loans that
received a 20 – 30 percent reduction in payment have a serious delinquency rate
(90+) of 28.1 percent after 18 months; a modification resulting in a 50 percent
or greater payment reduction has a rate of 12.9 percent.  The table below compares various loan
reductions against a 60+ delinquency.

The program continues to improve its
numbers in terms of shortening the length of what are supposed to be three
month modification trials but which, in the earlier days of the program, often
dragged on for many times that length.  The
average duration of the trial period for those converted to a permanent HAMP
modification has decreased from 5.3 months for trials started prior to June 1,
2010, to 3.5 months for trials started after June 1, 2010 when substantial
changes were made to the HAMP guidelines. 
All servicers but Chase, which is averaging 4.6 months, are actually below
that 3.5 month average.  

In September the number of active trials
that had lasted for more than six months was down from 27,345 in August to
19,793.  In September 2010 there were
76,500 trials that had been in existence for six months or more.  Bank of American and Chase are noteworthy in
this category.  While the two services
together were responsible for 40.5 percent of all trials initiated over the life
of the program, they hold 61.57 percent of the extended trials.  Nine of the 12 largest servicers have reached
the 80 percent benchmark in converting to permanent status those trials started
after June 30, 2010.  SPS has the best
record at 90 percent, Chase the worst at 72 percent.

HAMP is responsible for several smaller
foreclosure avoidance programs.  Servicers
have started 32,078 agreements under the Home Affordable Foreclosure
Alternatives (HAFA) program and completed 18,557.  Just over 500 of the completed transactions
were deeds-in-lieu of foreclosure, the remainder were short sales.

The Second Lien Modification Program (MP2)
has started 45,705 modifications of junior liens and has extinguished 6,332 and
modified 38,658.

HUD says of
HAMP, “Even as new delinquencies continue to fall, eligible homeowners entering
HAMP have a high likelihood of earning a permanent modification and realizing
long-term success.
Eighty percent of eligible homeowners entering a HAMP trial modification since June 1, 2010
received a permanent modification, with an average trial period of 3.5 months.
After six months in the program, more than 94 percent of homeowners remain in
their HAMP permanent modification. Homeowners in HAMP permanent modifications
have saved an estimated $8.8 billion to date.”

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