The second edition of the new Obama Administration Housing Scorecard issued yesterday shows that borrowers continue to enter into both trial and permanent modifications under the Treasury Department's Home Affordable Modification Program (HAMP), but they are also continuing to drop out of the program in high numbers after failing to meet program terms.  

The Scorecard, first issued last month, is an adjunct to the monthly report on HAMP and is intended to reflect the overall state of the nation's housing market. In addition to a summary of statistics on HAMP, the scorecard incorporates key housing market indicators and highlights of housing recovery efforts.

The heart of the report, however, continues to be the operations of HAMP.  Since the last scorecard was issued in June, 38,700 distressed homeowners have been placed in HAMP trial modifications compared to 30,100 in the previous report.  A total of 1.23 million households have begun trials since the program was started in April, 2009, 520,814 of those trial modifications have been cancelled since the program began.  

A total of 416,400 permanent modifications have been achieved during the 15 months the program has been in operation and 364,077 borrowers remain in trial status. 51,900 borrowers completed trial modifications in the last month and were entered into permanent modifications compared to 47,700 during the last period.  HAMP has been widely criticized for the pace at which servicers have converted borrowers in trial modifications to a permanent status, and the current report introduces some servicer metrics in an attempt to pinpoint some of the program's weaknesses.

Of the over half-million loans for which trials were cancelled, 344,869 were held by eight servicers and were individually tracked in the report. 45 percent of that subset of loans was placed by the servicer in a different modification program; action is pending on 32 percent of the loans, 6.6 percent of loans have been brought current or paid off.  Foreclosures have been started for almost 9 percent and completed on just over 1 percent.  Cancellation rates among trial modifications are continuing to increase as servicers work through a substantial backlog of loans.  Of the trials canceled in June, more than 60 percent had been in trial status for six months or more.

Approximately 230,000 of the loans that have received permanent modifications have fallen into some stage of delinquency.  5.9 percent of modifications were over 60 days delinquent within three months of permanent modification; 7.6 percent after six months, and 10.1 percent after nine months.  However, only the small numbers of loans converted to permanent status after the fourth quarter of 2009 have aged sufficiently for the 60 and 90 day buckets to have any significance.

The report measures servicer performance on several metrics including the average time it took them to answer borrower calls, the rate at which callers abandoned calls that were not promptly serviced, the time it took a servicer to resolve "third party escalations", and the level of borrower complaints to HAMP administrators.  Of the eight largest servicers, Bank of America, Litton, and J.P, Morgan Chase had the worst performance on the call center metrics, Chase, Bank of America and One West took the longest time to resolve third-party escalations (averaging in excess of 30 days compared to a program average of 25 days), and Litton and Chase logged by far the highest number of consumer complains.

In addition to the HAMP statistics, the Scorecard reported that there were 32,900 FHA loss interventions during the month compared to 25,200 in May and 112,100 HOPE Now modifications, up from 103,100 in May.   

Overall, there have been over twice as many homeowners helped compared to those that saw a foreclosure completed. Nearly three million borrowers have received restructured mortgages since April 2009, outpacing the 1.24 million foreclosure completions for the same period. As more families are able to remain in their homes, household assets continue to rise with $1.1 trillion in home equity gained since April 2009.

The Scorecard noted that the recovery of the housing market remains fragile.  For example, sales of new and existing homes dropped in May, following the expiration of the homebuyer tax credits, to 25,000 and 471,700 respectively from 37,200 and 482,500. There is now an 8.3 month supply of existing and 8.5 months supply of new homes on the market compared to 8.4 months and 5.8 months in the previous period.  The sharp increase in months-to-sell for new homes was a function of slowing sales rather than increasing inventory.

Housing affordability remains near the most attractive levels in 10 years, due in part to continuing low interest rates.  The affordability index was 162.0 compared to 168.3 in May and 174.2 one year earlier.

During the report period, the Department of Housing and Urban Development awarded nearly $2 billion in Recovery Act Funds in the second round of Neighborhood Stabilization Program (NSP) grants.  The $6 billion NSP program is an effort to help local jurisdictions address the foreclosure crisis by allowing grantees to purchase, redevelop and rent or sell foreclosed homes to low and moderate income households.  

Other data from the report:

  • There were 1,100,800 mortgage originations for refinancing and 1,140,800 purchase loans during the period. FHA originated 252,200 loans for refinancing and 118,900 loans for purchasing homes. 89,200 of the FHA purchase loans went to first-time buyers.
  • Delinquencies among prime mortgages decreased slightly to 5.6 percent from 5.9 percent the previous month and subprime delinquencies were also down from 36.4 percent to 36.3 percent. FHA delinquencies remained flat at 12.4 percent.
  • Nationwide, 11,276,900 borrowers were considered to be "underwater" on their mortgage loans; however, this number was over 100,000 below the previous month's estimate.