It’s been a year since the government’s Home Affordable Modification Program (HAMP) was implemented and only 170,207 troubled homeowners have received permanent loan restructurings. The number of modifications in thepermanent column did increase 45 percent from 116,297 in January, but it’s still a mere drop in the bucket when you consider the Treasury’s own estimate that there are currently 1.8 million borrowers who are behind on their payments and eligible for the program.
According to the administration’s February HAMP report card released Friday, more than 1.3 million homeowners have received offers for trial modifications, and the Treasury says this represents 34 to 45 percent of the administration’s goal of 3 to 4 million offers extended by the end of 2012. But the sticking point still seems to be in converting trials to permanent status.
The colorful debate continues over whether the blame for this lies with the servicers or the homeowners themselves. DS News is still hearing homeowner horror stories of servicing staff losing paperwork, misplacing files, or being so unfamiliar with the program procedures that homeowners and their counselors are given erroneous information when they finally reach someone for follow-up.
On the other hand, though, servicers say the delay in many cases is on the part of the borrower. And the Treasury’s February report does show that there are another 91,843 permanent modifications pending, that have been approved by servicers and are just waiting on the borrower’s signature.
During the conversion process, servicers have repeatedly faulted borrowers for not providing the correct required documentation to finalize the modification. The Treasury is expecting to circumvent this blip in the program, though, by requiring that all the necessary paperwork be submitted prior to the trial phase commencing.
Throughout the first 10 months of HAMP, servicers were allowed to initiate a trial mod based on stated, not verified, income. The verification came later, after the borrower successfully completed their trial payments but before the mod was converted to permanent status. The new upfront requirement applies to all new HAMP modifications that become effective after June 1, and the Treasury says this policy change should significantly expedite servicers’ conversion rates.
As of the end of February, the Treasury says more than one million borrowers were receiving a median savings of $500 each month – a 36 percent median monthly payment decrease. In aggregate, the administration calculates that homeowners have saved over $2.7 billion through trial and permanent modifications. Upon completing one year of on-time payments per HAMP guidelines, borrowers are eligible to earn up to $1,000 to be applied to their outstanding mortgage balance.
Of modifications that have converted to permanent status, the Treasury reports that 0.9 percent have been canceled, due to the borrower’s failure to fulfill the payment obligations. Of all modifications started, 8.2 percent have been canceled.
Looking at the largest servicers’ numbers, Wells Fargo has completed 24,975 permanent modifications, putting it out in front of the pack yet again. Bank of America has permanently modified 20,666 of its troubled mortgages, but has another 22,000 pending.
JPMorgan Chase has converted 19,385 trials to permanent status. CitiMortgage has completed 15,607 permanent mods, and GMAC has permanently modified 14,675 delinquent loans.
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