The U.S. Departments of Treasury and Housing and Urban Development (HUD) have jointly issued the January Housing Scorecard.  The Scorecard is a round-up of most national housing data including reports for the Census Department, National Association of Realtors® (NAR), S&P/Case-Shiller, etc., all of which has been published on MND already.

The focus of the Housing Scorecard this month is the Making Home Affordable Program (HAMP), the joint Treasury/HUD initiative to modify delinquent mortgages and prevent foreclosures.  Despite several efforts to retrench and modify the program, it has received criticism from Congress, borrowers, and consumer groups for its failure to move borrowers from the required three month trial modification program into permanent loan modifications.

Since the program began in April 2009, 1,466,000 distressed borrowers have entered into trials with their respective servicing companies.  This is an increase of 29,000 since November and represents about half of the delinquent loans that are estimated to be eligible for the program. 

As of the end of December approximately 580,000 borrowers had converted their temporary modifications into permanent ones, up 30,030 from November. Conversions have averaged 30,000 per month over the last six months of HAMP data.  Servicers have picked up the pace of clearing out aged trials; at the end of November 39,800 loans had lingered in trial modification status for six months or more, down from 69,900 the previous month. Over the course of the program 734,509 trial modifications have been cancelled as have 58,020 that had reached permanent status. 

As permanent modifications age some data on the success of the program are beginning to emerge, but it is too early to draw many conclusions about re-defaults. At least three months worth of data exists for all loans that had been modified through the end of Q3 2010 and, of those 4.7 percent had already fallen into the 60+ day delinquent category and 1.4 percent were 90+ days delinquent.  Early performance numbers, however, appear to have been improving as the program ages.

The first modifications, made permanent in Q3 of 2009 were 9.8 percent and 3.5 percent delinquent 60+ and 90+ days after conversion.  The delinquency rates for loans 6 months into permanent status also show improvement across the life of the program.  The 60+ and 90+ day rate for loans originated in Q3 was 14.9 percent and 9.8 percent respectively; this improved to 11.8 percent and 7.0 percent for loans originated in Q2 2010, the last quarter for which this information is available.  All loans in permanent status for at least a year, a total of 57,051, have a 60+ day re-default rate of 20.5 percent and a 90+ rate of 15.8 percent.

The program's success rate also appears to improve where modifications are more aggressive.  Modifications that decreased the monthly principal and interest payments by 30 percent or more performed more than twice as well across all time periods than those that decreased payments by less than 20 percent.  For example, 12 months or more after modification, those loans with less than a 20 percent drop in payment had a 90+ day re-default rate of 26.2 percent; for loans with a 20 to 30 percent decrease it was 19.5 percent, and for those loans with payment modifications over 30 percent it was 12 percent.   

In conjunction with the HAMP Report, the two agencies also released preliminary analysis of data from the Making Home Affordable (MHA) Data File which includes characteristics of HAMP program participants. The MHA Data File offers mortgage loan-level data and is intended to allow for better understanding of the impact of the program.

 Key findings that emerged from a preliminary analysis of the MHA Data File include:

• To date, most program participants are moderate and middle income, financially-distressed homeowners who are "underwater" on their mortgages.
• Borrowers in active permanent HAMP modifications have a median annual income of approximately $46,000; a median credit score of 570 upon entering the trial period; a post-modification loan balance of just over $232,000 and a median mark-to-market loan-to-value (LTV) of 118 percent.
• Where borrowers reported race and ethnicity, African-Americans account for 18 percent of active permanent modifications and Hispanics account for 26 percent.
• Homeowners in active permanent modifications have seen their monthly mortgage payment cut by a median of approximately 40 percent. Eighteen percent of homeowners in active permanent modifications have reduced their monthly mortgage payment by more than $1,000 each month.

The Housing Scorecard reports that public and private foreclosure prevention programs including HAMP have started 4.1 million modifications arrangements since April 2009, more than twice the number of actual foreclosures completed in the same period.  In addition to the 1.4 million HAMP actions there were 650,000 FHA modifications and interventions and nearly 2 million proprietary modifications under the government/private sector HOPE Now program.

"Over the last 20 months, the Obama Administration has confronted the nation's housing crisis with an unprecedented effort to promote stability in the market - keeping millions of families in their homes and helping millions more to save money by refinancing. But the data clearly show that the market remains extremely fragile," said HUD Assistant Secretary Raphael Bostic. "We know that many responsible homeowners are still fighting to make ends meet. That's why we're committed to continuing to provide help to homeowners by implementing the broad range of programs the Obama Administration has put in place."