The U.S. Departments of the Treasury and Housing and Urban Development are celebrating the early completion of more than 500,000 trial loan modifications under their Making Home Affordable Program (HAMP.)

Under the program, servicers are paid up to $4,000 over three years for successful loan modifications.

The half-million loan goal was set early in the life of the program which seeks to help delinquent homeowners stay in their homes.  The benchmark was reached nearly a month ahead of the original November 1 target date and in spite of a slow start earlier this year.  

The program, which was first announced in February, was in fact pretty much a mess by the end of May when only about 50,000 homeowners had been helped and thousands were complaining about the lack of organization and sensitivity of the program.

During a meeting in June the Treasury Department was apparently able to appropriately motivate the servicers to add additional staff, step up training, and implement more effective procedures and the numbers have been increasing exponentially ever since.

Treasury and HUD officials met with servicers again on Thursday afternoon.

In addition to announcing that the 500,000 modification goal had been met, the two department issued a report on their achievements up to the end of September. 487,081 trial modifications had begun, nearly 2.5 million borrowers had been contacted and asked for financial information, and 758,000 trial plan offers had been extended by servicers.

By the end of September 63 servicers were participating in HAMP.  This is in addition to a much larger number of Freddie Mac and Fannie Mae servicers which are automatically included in the program.  The voluntarily participating servicers are responsible for over 85% of all 60 day or more delinquent mortgages in the country.  

While a few servicers have not yet modified any loans, several of the largest ones have already put 25 to 47 percent of their delinquent borrowers into the required trial modification period. Read the report HERE

Mortgage News Daily Managing Editor Adam Quinones adds perspective, "While it's exciting to see servicers participating in the administration's efforts to slow foreclosures and stabilize housing, we cannot gauge the success of the program until previously delinquent borrowers prove they can stay current on their restructured loan terms. Regardless of lower payments and extended loan terms, the simple truth is many borrowers are still underwater on their mortgage and therefore more likely to re-default on their loan".