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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.Loan Mod Conversion Rate Improves in February. True Success Depends on Job Creation
The Making Home Affordable Program (HAMP), a joint effort by
the Departments of the Treasury and Housing and Urban Development to prevent
foreclosures, is reporting that 168,708 homeowners have now graduated from the
HAMP trial modification program and have active permanent modifications by the end of February. This works out to a 12.4 percent conversion rate, a modest improvement from January when the permanent modification conversion rate was 9.2 percent.
The program, which began last spring, has now enrolled
1,094,064 borrowers in modifications which lower mortgage payments to a
maximum
of 31 percent of monthly income.
1,354,350 invitations to participate in the program have been extended
to distressed homeowners. This is 34 to
45 percent of the goal of 3 to 4 million set for the end of 2012. At
present 835,194 loans are in some phase of
the trial period, a number which includes the pending permanent
modifications. To date 88,663 trial modifications and 1,499 permanent
modifications have been cancelled. The report does not give any
reasons for the
cancellations. In addition, 91,843
borrowers had successfully completed the three month trial period and
permanent
modifications were awaiting borrower acceptance.
[Image or graph removed from email. View full article with images]
Servicers handling administration of the program can modify
loans through a reduction of the interest rate, extension of the term of the
loan, and/or forbearance of principal.
100 percent of permanent modifications had a reduction in rate, 41
percent an extension of term, and 27.8 percent received forbearance. The median decrease in monthly payment for
those in the program is $518.88, resulting in a median payment of $837.86. These homeowners' lower monthly payment represents a cumulative $2.7 billion in savings. Borrowers who successfully complete the trial
program and convert to permanent status are guaranteed the modified payment for
at least five years. In addition, those
borrowers who make on-time payments for one year under the permanent
modification are eligible for a credit of $1,000 on their outstanding mortgage
balance.
HAMP estimates that, at present, approximately
1.8 million loans are eligible for a HAMP modification. This is somewhat scary as there are an estimated 6.0 million residential mortgages
that are 60+ days delinquent, implying perhaps the worst has yet to come. Approximately 1.6 million of these are either government guaranteed (VA,
FHA) loans or serviced by non-participating HAMP servicers. Servicers
are encouraged by HAMP to solicit
information from delinquent borrowers regardless of their apparent
eligibility for
the program and solicitations have been sent to 3.84 million borrowers
to date.
[Image or graph removed from email. View full article with images]
Servicers vary widely in the percentage of borrowers they
have enrolled in the program. GMAC and
CitiMortgage continue to have the best participation rate, with both reporting
slightly more than half of their eligible borrowers are in either trial or
permanent modifications. Most major
servicers now have a participation rate over 25 percent with the exception of Bank of America. Broken down by investor types, more than 50 percent of HAMP
modifications are to GSE loans, 34 percent are held by private investors, and 9
percent are portfolio loans.
[Image or graph removed from email. View full article with images]
Program participants continue to report that loss of income
is the leading cause of their mortgage difficulties, with 57.4 percent
reporting that problem. This category
includes both unemployment and a reduction in hours or wages. 10.8
percent of borrowers said their programs
were caused by excessive obligations and 2.7 percent cited illness.
[Image or graph removed from email. View full article with images]
Again, MND calls attention to the fact that 57.4 percent of permanent loan modifications were made to borrowers who are out of a job or underemployed. The true success of this program is dependent on whether or not these homeowners are able to get a job and continue paying their below market mortgage payment. If not, the loans will re-default.
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This email was sent to you by:
|
Mortgage News Daily
|
 |
Anonymous Anonymous |
|
Message:
YOUR MESSAGE HERE
Loan Mod Conversion Rate Improves in February. True Success Depends on Job Creation
The Making Home Affordable Program (HAMP), a joint effort by
the Departments of the Treasury and Housing and Urban Development to prevent
foreclosures, is reporting that 168,708 homeowners have now graduated from the
HAMP trial modification program and have active permanent modifications by the end of February. This works out to a 12.4 percent conversion rate, a modest improvement from January when the permanent modification conversion rate was 9.2 percent.
The program, which began last spring, has now enrolled
1,094,064 borrowers in modifications which lower mortgage payments to a
maximum
of 31 percent of monthly income.
1,354,350 invitations to participate in the program have been extended
to distressed homeowners. This is 34 to
45 percent of the goal of 3 to 4 million set for the end of 2012. At
present 835,194 loans are in some phase of
the trial period, a number which includes the pending permanent
modifications. To date 88,663 trial modifications and 1,499 permanent
modifications have been cancelled. The report does not give any
reasons for the
cancellations. In addition, 91,843
borrowers had successfully completed the three month trial period and
permanent
modifications were awaiting borrower acceptance.
Servicers handling administration of the program can modify
loans through a reduction of the interest rate, extension of the term of the
loan, and/or forbearance of principal.
100 percent of permanent modifications had a reduction in rate, 41
percent an extension of term, and 27.8 percent received forbearance. The median decrease in monthly payment for
those in the program is $518.88, resulting in a median payment of $837.86. These homeowners' lower monthly payment represents a cumulative $2.7 billion in savings. Borrowers who successfully complete the trial
program and convert to permanent status are guaranteed the modified payment for
at least five years. In addition, those
borrowers who make on-time payments for one year under the permanent
modification are eligible for a credit of $1,000 on their outstanding mortgage
balance.
HAMP estimates that, at present, approximately
1.8 million loans are eligible for a HAMP modification. This is somewhat scary as there are an estimated 6.0 million residential mortgages
that are 60+ days delinquent, implying perhaps the worst has yet to come. Approximately 1.6 million of these are either government guaranteed (VA,
FHA) loans or serviced by non-participating HAMP servicers. Servicers
are encouraged by HAMP to solicit
information from delinquent borrowers regardless of their apparent
eligibility for
the program and solicitations have been sent to 3.84 million borrowers
to date.
Servicers vary widely in the percentage of borrowers they
have enrolled in the program. GMAC and
CitiMortgage continue to have the best participation rate, with both reporting
slightly more than half of their eligible borrowers are in either trial or
permanent modifications. Most major
servicers now have a participation rate over 25 percent with the exception of Bank of America. Broken down by investor types, more than 50 percent of HAMP
modifications are to GSE loans, 34 percent are held by private investors, and 9
percent are portfolio loans.
Program participants continue to report that loss of income
is the leading cause of their mortgage difficulties, with 57.4 percent
reporting that problem. This category
includes both unemployment and a reduction in hours or wages. 10.8
percent of borrowers said their programs
were caused by excessive obligations and 2.7 percent cited illness.
Again, MND calls attention to the fact that 57.4 percent of permanent loan modifications were made to borrowers who are out of a job or underemployed. The true success of this program is dependent on whether or not these homeowners are able to get a job and continue paying their below market mortgage payment. If not, the loans will re-default.
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