Consumer Law

Latest HAMP report: Treasury program a failure

By Alan White

By Alan White

Treasury released its latest Home Affordable modification program (HAMP) numbers today. Despite their efforts to put a positive spin on it, the program is a failure.   A million homeowners have been lured into temporary payment plans with false promises of permanent loan restructuring.  After 11 months, only one in ten has had their mortgage permanently modified.  More disturbing is the fact that these one million homeowners in trial mods, i.e. short-term payment plans, were given a deadine of January 31 to convert to a permanent mod.  Treasury reports that about 33% of those who have been in trial payments for three months or more have missed payments.  The other two-thirds are making their payments.  That means that more than 500,000 homeowners are in trial modifications, making payments on time, but about to be kicked out of the program, presumably because of missing paperwork.

Mortgage servicers were permanently modifying around 100,000 loans a month before HAMP started.  HAMP?s highest monthly total yet was the 50,000 additional permanent modifications achieved in January 2010 (116,000 reported this month minus 66,000 reported last month).  Meanwhile, new foreclosure filings are adding 250,000 to 300,000 homes to the crisis every month. 

Rather than owning up to this dismal performance, Treasury continues to obfuscate the statistics. 

Treasury points out that there were also 76,000 modification offers pending at the end of January, in addition to a cumulative total of 116,000 done deals.  However, there were already 46,000 outstanding offers pending at the end of December.  Presumably, some of the 46,000 offers contributed to the 50,000 net new modifications for January.  In other words, you can?t really count this month?s modifications and the offers that will become next month?s mods in a single monthly tally.  New defaults and foreclosures are started monthly, foreclosure sales are conducted monthly (probably about 100,000), and a fair assessment of HAMP requires looking at monthly modifications, not cumulative 11-month totals. 

Bank of America continues lagging behind all its competitors, having concluded permanent modifications for just 3,200 out of more than a million eligible mortgages.  Other servicers have trial mod and conversion rates of ten times that.  BofA also happens to service more delinquent mortgages than any other company.  At this point the Administration needs to rethink its response to the foreclosure crisis.  The current plan is not working.

Full post as published by CL&P Blog on February 17, 2010 (boomark / email).