Growing equity and a rebound in sales of new and existing homes were the highlight of the June edition of the Obama Administration's Housing Scorecard.  New home purchases surged by 18.6 percent in May, to the highest level since May 2008 indicating, the report says, that home sales are rebounding from a severe-weather induced lull in the previous two quarters.  Existing homes sold at an annual pace of 4.89 million in May, up 4.9 percent from April but remain 5.0 percent below the 5.15 million pace a year-earlier. 

The Assistant Secretary for Policy Development at the Department of Housing and Urban Development, which issues the monthly update in conjunction with the Treasury Department, said the scorecard shows continued progress in the housing market as the country moved into the summer months.  Katherine O'Regan said, "Sales of new and existing homes are up, equity continues to grow, and foreclosures starts continue trending down. While these are all signs of a healthy recovery, given the severity of the housing crisis, we must stay committed to helping homeowners." 

The Housing Scorecard offers a recap of information about the housing market, summarizing statistics on construction, sales, delinquencies, defaults, and foreclosures from major sources such as CoreLogic, the U.S. Census Bureau, National Associations of Realtors and Home Builders, and RealtyTrac.  Most of this information has been previously covered in these pages. 

The report also includes by reference the monthly report of the Marking Home Affordable program (MHA) and its several initiatives such as the Home Affordable Modification Program (HAMP), and Home Affordable Foreclosure Alternatives (HAFA).

MHA reports it has initiated 2.09 million trial modifications since the program began in early 2009.  Of these a total of 2.20 million were started through HAMP and 203,480 were through Fannie Mae or Freddie Mac's standard modification programs. 

The current MHA report covers program activity in May during which there were 10,152 HAMP trials begun and 11,774 trials converted to permanent status.  There are 42,573 active HAMP trials and 954,692 active permanent modifications.

During the first year of HAMP's existence the program was plagued with huge backlogs of borrowers in trial status who had not converted their modifications.  This was the result in most cases of missing documentation - although borrowers and servicers each blamed the other for that situation.  In June 2010 HAMP rules were changed to require servicers to have all borrower financial information in place before beginning a trial.  MHA said in its current report that there is now an 89 percent success rate in converting trial modifications to permanent status.  Prior to the rule change that rate was 44 percent.

The Second Lien Modification Program (2MP) featured in the current report, provides modifications and extinguishments on second liens when there has been an eligible first lien modification on the same property.  At the end of May 136,000 borrowers had initiated modifications on their second mortgages through the program.

Homeowners in 2MP with an active permanent modification save a median of $154 per month on their second mortgage, resulting in a median total first and second lien monthly payment reduction of $784, or 42% of their median before-modification payment. Homeowners who receive a full extinguishment of their second lien receive a median total first and second lien monthly payment reduction of $1,040, or 53% of their before-modification payment.



Servicer survey data indicates that 363,613 qualifying first lien modifications have been matched with a second lien. Of these matched second liens, approximately 56% are found to be ineligible for a 2MP modification. The most common reasons for ineligibility are: Cancellation or failure of a trial or permanent first lien HAMP modification, extinguishment of the second lien prior to evaluation for 2MP, or failure of a 2MP trial modification.  In addition some homeowners with eligible second liens decline to participate in 2MP.

MHA estimates that an additional 24,000 borrowers may be eligible to receive a 2MP modification. Many of these are in process of being evaluated by servicers, awaiting homeowner response to the 2MP offer, or awaiting conversion of the first lien HAMP trial to permanent modification.  

"Although the housing market continues to improve, Treasury remains committed to helping homeowners who are still struggling to make their mortgage payments," said Treasury Acting Assistant Secretary Tim Bowler. "To date, more than 1.3 million homeowners have received a permanent modification through the Home Affordable Modification Program (HAMP), saving an estimated $28.2 billion in mortgage payments."