1. HAMP Modification Report Highlights

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Activity Through March, 2011

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The report is divided into 6 sections as shown by the navigational tabs above.

 

1. Modification Report
2. Permanent Mods
3. Servicer Report
4. Conversions
5. Borrower Experience
6. Servicer List

 

Conclusive Results

 

751,474 borrowers have dropped-out of the program as of March, 2011. This represents 48% of the 1.5 million people enrolled since the program's launch in March 2009.

 

670,186 borrowers have been granted permanent modifications or are making on-time mortgage payments. This number represents 43% of borrowers who have begun their trial program since the program's inception on March 2009.

 

Till date, permanent modifications through the HAMP program have granted homeowners aggregate reductions in monthly mortgage payments of close to $5.9 billion. Mortgage servicers continue to provide trial modifications at a steady pace, averaging about 29,000 new trial modifications for the last 6 months.

 

Major Causes of Large Drop-Outs

 

In the early stages of the program, many servicers or lenders signed up borrowers without verifying their income. As a result, many borrowers were forced to drop-out when lenders and servicers failed to collect proof of income.

 

There are two sides to the story. Borrowers complained that the process was a bureaucratic nightmare. They accused banks for often losing their documents. On the other hand, banks accuse borrowers for not turning in the necessary paperwork.

 

As of June 2010, participating services are required to demand upfront verification of income prior to allowing borrowers and applicants begin their trial modifications. The prior method of verbal stated income is no longer allowed.

 

	TRIAL MODIFICATIONS
	Trial Plan Offers Extended				1,820,372
	All Trials Started				1,559,023
	Trial Reported Since Feb 2011 Report				36,827
	Trial Modifications Canceled				751,474
	Active Trials				137,363
	PERMANENT MODIFICATIONS
	All Permanent Modifications Started				670,186
	Permanent Mods Since Feb 2011 Report				36,432
	Permanent Mods Canceled				83,270
	Active Permanent Modifications				586,916

 

Permanent Modifications - March, 2011

 

36,432 borrowers were granted permanent modifications for the month of March, 2011. This is a increase from 26,147 permanent modifications from the previous month of February, 2011. Permanent modifications were previously averaging more than 50,000 per month for the past 6 months until July, 2010.

 

Home borrowers who received permanent modifications are experiencing a median payment reduction of 36%. This amounts to an average savings of $525.94 per month. Their median first-lien housing expense falls from nearly 37% of their monthly income to 31%. Permanent modifications prove to be performing well over the long-run as larger payment reductions translate into stronger performance. Homeowners whose mortgage payments were reduced by more than 50% through a HAMP permanent modification performed significantly better relative to those with payment reductions of 20% or less.

 

After one year, less than 12% of borrowers with a payment reduction greater than 50% were 60+ days delinquent. At 12 months, greater than 84% of homeowners remain in HAMP permanent modifications. The remaining 16% have been disqualified from the program for missing 3 consecutive payments. HAMP permanent modifications continue to be sustained at better rates than industry modifications.

 

Home borrowers in permanent modifications are guaranteed lower payments for 5 years followed with fixed terms based on today's current low rates for the life of the loan.

 

Status of Cancellations & Borrower Drop-Outs

 

The volume of trials lasting more than 6 months have fallen to 26,400 for the month of March 2011, a reduction from 32,017 from the previous month of February 2011. Program guidance directs servicers to cancel or convert trial modifications after 3 or 4 monthly payments, depending on unique circumstances.

 

The most popular reasons for borrower drop-outs (trial cancellations) include: 

1. Missing or incomplete documents
2. Missed trial payments
3. Mortgage payments already less than 31% of the homeowner's income thus making the borrower not qualify for the program.

 

 Alternative Modification For Borrowers Who Have Dropped Out

 

An estimated 50% of homeowners who have dropped out from their trials were granted an alternative modification, became current or paid off the loan entirely. The data is based on a survey provided by 8 of the largest HAMP servicers.