HAMP Reaching Underwater and Middle Class Borrowers: Report

The ""U.S. Treasury"":http://www.treasury.gov and ""HUD"":http://www.hud.gov released a new report Monday on the state of the housing market, including new metrics that provide a more granular view of the administration's Home Affordable Modification Program (HAMP).

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The ""latest housing scorecard"":http://www.hud.gov/scorecard shows increased new and existing home sales as home affordability remains high, but officials caution that the market remains fragile with prices still in flux. Foreclosure starts and completions remained low at the end of last year as lenders continued to review internal servicing procedures, but the report notes that this lull is likely to be temporary as foreclosure paperwork is corrected and resubmitted in the coming months.

Included in the administration's latest account is a new ""Making Home Affordable Data File"":http://www.treasury.gov/initiatives/financial-stability/results/Pages/mha_publicfile.aspx, which offers mortgage loan-level data and includes characteristics of program participants to date.

Most program participants are moderate and middle income, financially-distressed homeowners who are underwater on their mortgages. Borrowers in active permanent HAMP modifications have a median annual income of approximately $46,000; a median credit score of 570; a post-modification loan balance of just over $232,000; and a median mark-to-market loan-to-value (LTV) ratio of 118 percent after modification.

According to the report, homeowners in active permanent mods have seen their monthly mortgage payment cut by a median of 40 percent. Eighteen percent of homeowners in active permanent modifications have reduced their monthly mortgage payment by more than $1,000 each month.

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Officials say the new drill-down is intended to provide a better understanding of the program's impact and fulfills a requirement within the Dodd-Frank Wall Street Reform Act to make loan-level data about the program available to the public.

""The data released today demonstrates that the administration's programs are reaching middle income homeowners and providing them with real payment relief,"" said Tim Massad, acting Treasury assistant secretary for financial stability. ""While we cannot prevent every foreclosure, it is important to remember that these programs have helped to create more options for affordable and sustainable assistance than have ever been available before.""

During the month of December, 30,030 HAMP trials were converted to permanent status, bringing the total number of active permanent mods under the program to 521,630.

Treasury’s ""HAMP snapshot"":http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Documents/Dec%202010%20MHA%20Report%20Final.pdf shows that the predominant hardship among borrowers in permanent mods is “loss of income” â€" 60.2 percent cite that as the reason they sought out mortgage assistance. “Excessive obligation” is listed as the hardship reason for 11.6 percent of borrowers in active permanent HAMP mods, while 2.6 percent of program participants experienced “illness of principal borrower.”

Administration officials say homeowners in the HAMP program continue to perform well over time, with re-default rates lower than industry norms. December data shows that after 12 months, nearly 85 percent of homeowners remain in a permanent HAMP modification.

According to the Treasury, homeowners in HAMP permanent modifications have already reduced their mortgage obligation by more than $4.5 billion to date.

Fall-out within the program remains high, however. Of the 1,466,448 HAMP trials that have been initiated since the program’s inception, half -- 734,509 -- have been canceled because the borrower was unable to keep up with their new payments or was determined to be ineligible for permanent assistance once income and other documentation were verified. An additional 58,020 permanent HAMP mods have been canceled.

Treasury notes in the report that as of last June, all homeowners now begin a trial modification with verified documentation, which streamlines the conversion process to a permanent modification.