Modified Fannie Mae and Freddie Mac Loans Perform Better When Done Through HAMP

Single-family mortgage loans backed by Fannie Mae and Freddie Mac perform better after modification when they are modified through the government's Home Affordable Mortgage Program (HAMP), according to the FHFA's Foreclosure Prevention Report for Q2 2015 released this week.

The Department of Treasury launched HAMP in February 2009 during the worst period of the housing crisis as a way for homeowners facing foreclosure to stay in their homes and lower their monthly mortgage payments through lowered interest rates and modified loan terms. HAMP has saved distressed homeowners an average of about $547 per month (about 39 percent) on mortgage payments by lowering their interest rate in many cases to 2 percent. HAMP is scheduled to expire at the end of 2016.

Only 5 percent of Fannie Mae-backed mortgage loans modified through HAMP were 60 or more days delinquent three months after modification as of the end of Q1 2015. For that same period, 85 percent of mortgage loans insured by Fannie Mae with a HAMP modification were current and performing three months after they were modified, according to FHFA. Compared with loans guaranteed by Fannie Mae with a proprietary, non-HAMP modification, 7 percent were 60 or more days delinquent three months after modification while 77 percent were current and performing, according to FHFA. For loans with a Freddie Mac guarantee, 84 percent of loans modified through HAMP were current and performing after three months (as of the end of Q1 2015) while 8 percent of those loans were delinquent. For Freddie Mac-insured loans with a non-HAMP modification, the numbers were 75 percent current and performing and 12 percent delinquent.

The trend of GSE-insured mortgage loans with HAMP modifications performing better than those not modified through HAMP remained six and nine months after modification, according to FHFA.

For Fannie Mae-backed loans modified through HAMP, 7 percent of loans were 60 or more days delinquent six months after modification while 82 percent were current and performing as of the end of Q4 2014. For loans with non-HAMP modifications, the number of loans 60-plus delinquent more than doubled to 15 percent and the number of current and non-performing loans dropped to 70 percent.

About 84 percent of Freddie Mac-insured loans with a HAMP mod were current and performing six months after modification as of the end of Q4 2014, while 8 percent were 60-plus days delinquent. By comparison, the numbers were 71 percent and 16 percent for Freddie Mac loans with a non-HAMP mod.

Nine months after modification, 8 percent of loans insured by Fannie Mae with a HAMP modification were 60-plus delinquent and 80 percent were current and performing as of the end of Q3 2014. The numbers were 18 percent and 66 percent, respectively, for Fannie Mae-backed loans with non-HAMP modifications.

For loans backed by Freddie Mac nine months after modification, 81 percent with a HAMP mod were current and performing as of the end of Q3 2014, while 11 percent were 60 or more days delinquent. For Freddie Mac loans with a non-HAMP modification, the shares were 68 percent and 19 percent after nine months, according to FHFA.

Click here to see the complete report.