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Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.HAMP Conversion Rate Improves. Majority of Permanent Mods Are Unemployed Borrowers
Posted to:
MND NewsWire
Wednesday, February 17, 2010 5:56 PM
The administration's Making Home Affordable Program (HAMP)
is beginning to look a little more robust based on figures released Wednesday
the U.S. Treasury Department and the Department of Housing and Urban
Development (HUD), joint sponsors of the program.
The newest figures indicate more borrowers
are emerging from trial loan modifications and signing permanent
loan modification offers. As of the end of January, a total of 116,297 permanent loan
modifications had been signed, nearly double the 66,465 reported at the end of
December. An additional 76,482 had been extended permanent modification offers
but had not yet returned the paperwork. 830,438
borrowers are still in some stage of the required three month trial period required
by the program guidelines.
[Image or graph removed from email. View full article with images]
Since the program began last spring, 1,269,937 households
have been extended loan modifications offers, 1,008,216 of which had enrolled in
trials. 60,500 had been cancelled. However, the rate at which new candidates are
entering the program is dropping. The
increase in enrollment from December to January was 80,500 compared to 109,500
from November to December and 110,081 the month before that. Enrollment in the trial peaked in October at
157,000.
[Image or graph removed from email. View full article with images]
The Treasury Department estimates that there are
approximately 5.6 million first mortgage loans that are 60 or more days delinquent,
however, only 1.7 million of these are currently estimated to be eligible for
inclusion in the HAMP program.
Eligible loans are modified so that payments do not exceed
31 percent of monthly income through interest rate reductions and, where
necessary, an extension of the term of the loan or forbearance of
principal. The Treasury Department
estimates that the median decrease in monthly payment is $522.
Some fall
out of eligibility because they are FHA or VA loans, jumbo loans, or those originated
after the eligibility end date for origination.
Others are eliminated based on being non-owner occupied or vacant or for
having negative income or a borrower debt ration already below the 31 percent
level the program is designed to achieve. While the report states that these numbers
represent a one-time snapshot and that more borrowers are expected to become
eligible for HAMP, it still appears that there are a significant number of troubled
loans out there that may not be reached by programs such as this and may
proceed to foreclosure.
HAMP utilizes loan servicers to contact borrowers who are 60
days or more delinquent on their mortgage payments, evaluate their eligibility
for the program and do the paperwork necessary to enroll them in trial
modifications. Over 100 servicers are
now enrolled as participants in the program and firms servicing Freddie Mac and
Fannie Mae owned loans are automatically enrolled as HAMP participants. The HAMP
program has been criticized for the low rate of conversion from trial to
permanent modification status and, in January program administrated enacted a
program of increased supervision of servicers and additional assistance to
borrowers in an attempt to improve the conversion rate.
Three of the servicers, CitiMortgage, GMAC, and Saxon
Mortgage Services are at or near having enrolled 50 percent of their delinquent
loans in the program and most of the large servicers have enrolled 30 to 40
percent of eligible loans in modifications.
[Image or graph removed from email. View full article with images]
While borrowers must
keep their modified loans current for three months before converting to
permanent status, only about 7,000 permanently modified loans have aged more
than three months so the program is still too young to allow any estimates of
the rate of default. As reported here yesterday, it is estimated the
redefault rate on Freddie Mac and Fannie Mae loan modifications are running at
about 60%.
MND's Adam Quinones adds one last observation from the report...
It is noted that the majority of successful loan modifications, 57.4% to be exact, have been borrowers who are out of work or are underemployed. If those borrowers are unable to get work, those loans might end up defaulting anyway. Again, this calls attention to the need for stimulus in the labor market.
[Image or graph removed from email. View full article with images]
JOBS JOBS JOBS!
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HAMP Conversion Rate Improves. Majority of Permanent Mods Are Unemployed Borrowers
Posted to:
MND NewsWire
Wednesday, February 17, 2010 5:56 PM
The administration's Making Home Affordable Program (HAMP)
is beginning to look a little more robust based on figures released Wednesday
the U.S. Treasury Department and the Department of Housing and Urban
Development (HUD), joint sponsors of the program.
The newest figures indicate more borrowers
are emerging from trial loan modifications and signing permanent
loan modification offers. As of the end of January, a total of 116,297 permanent loan
modifications had been signed, nearly double the 66,465 reported at the end of
December. An additional 76,482 had been extended permanent modification offers
but had not yet returned the paperwork. 830,438
borrowers are still in some stage of the required three month trial period required
by the program guidelines.
Since the program began last spring, 1,269,937 households
have been extended loan modifications offers, 1,008,216 of which had enrolled in
trials. 60,500 had been cancelled. However, the rate at which new candidates are
entering the program is dropping. The
increase in enrollment from December to January was 80,500 compared to 109,500
from November to December and 110,081 the month before that. Enrollment in the trial peaked in October at
157,000.
The Treasury Department estimates that there are
approximately 5.6 million first mortgage loans that are 60 or more days delinquent,
however, only 1.7 million of these are currently estimated to be eligible for
inclusion in the HAMP program.
Eligible loans are modified so that payments do not exceed
31 percent of monthly income through interest rate reductions and, where
necessary, an extension of the term of the loan or forbearance of
principal. The Treasury Department
estimates that the median decrease in monthly payment is $522.
Some fall
out of eligibility because they are FHA or VA loans, jumbo loans, or those originated
after the eligibility end date for origination.
Others are eliminated based on being non-owner occupied or vacant or for
having negative income or a borrower debt ration already below the 31 percent
level the program is designed to achieve. While the report states that these numbers
represent a one-time snapshot and that more borrowers are expected to become
eligible for HAMP, it still appears that there are a significant number of troubled
loans out there that may not be reached by programs such as this and may
proceed to foreclosure.
HAMP utilizes loan servicers to contact borrowers who are 60
days or more delinquent on their mortgage payments, evaluate their eligibility
for the program and do the paperwork necessary to enroll them in trial
modifications. Over 100 servicers are
now enrolled as participants in the program and firms servicing Freddie Mac and
Fannie Mae owned loans are automatically enrolled as HAMP participants. The HAMP
program has been criticized for the low rate of conversion from trial to
permanent modification status and, in January program administrated enacted a
program of increased supervision of servicers and additional assistance to
borrowers in an attempt to improve the conversion rate.
Three of the servicers, CitiMortgage, GMAC, and Saxon
Mortgage Services are at or near having enrolled 50 percent of their delinquent
loans in the program and most of the large servicers have enrolled 30 to 40
percent of eligible loans in modifications.
While borrowers must
keep their modified loans current for three months before converting to
permanent status, only about 7,000 permanently modified loans have aged more
than three months so the program is still too young to allow any estimates of
the rate of default. As reported here yesterday, it is estimated the
redefault rate on Freddie Mac and Fannie Mae loan modifications are running at
about 60%.
MND's Adam Quinones adds one last observation from the report...
It is noted that the majority of successful loan modifications, 57.4% to be exact, have been borrowers who are out of work or are underemployed. If those borrowers are unable to get work, those loans might end up defaulting anyway. Again, this calls attention to the need for stimulus in the labor market.
JOBS JOBS JOBS!
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