HAMP’s Re-Default Rate Below Industry Benchmarks at 16%: Treasury

Sixteen percent of homeowners receiving permanent assistance through the government's Home Affordable Modification Program (HAMP) have been disqualified from the program for missing three consecutive payments, according to ""Treasury"":http://www.treasury.gov.
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Federal officials say HAMP's permanent mods are performing well over time, with 84 percent of participants still current at 12 months after modification.

""HAMP permanent modifications continue to be sustained at better rates than industry modifications,"" Treasury said in a report released Friday.

The latest data demonstrate the relationship between the size of the reduction in a borrower's monthly mortgage payment and the loan's future performance.

Treasury reports that homeowners whose housing payment was cut by more than 50 percent through a HAMP modification performed ""significantly better"" than those with payment reductions of 20 percent or less.

After one year, fewer than 12 percent of borrowers whose payment was reduced by at least half were 60-plus days delinquent.

HAMP has faced harsh criticism for falling short of its initial goals, with lawmakers in the U.S. House going so far

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as to pass a measure in late March to ""terminate the federal mod program"":http://dsnews.comarticles/house-votes-to-terminate-governments-mortgage-modification-program-2011-03-29 _(Note: The bill has not made any progress in the Senate and would be met with a veto from the president.)_

Treasury officials counter that criticism with assertions that HAMP is setting standards for servicers to apply to their own mod programs to ensure borrowers can keep up with the new payments and remain out of foreclosure, which ultimately translates into more options for more families to obtain truly beneficial assistance.

According to Treasury's ""latest HAMP report"":http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Documents/March%202011%20MHA%20Report%20FINAL.PDF, there are currently 587,000 borrowers in a permanent HAMP modification.

More than 36,000 new permanent modifications were reported in March. Treasury says some actually began in prior months but were just recently entered into the HAMP system of record.

Government data show that the median payment reduction for borrowers in a permanent mod is 37 percent, or about $500 a month. Treasury says HAMP has saved homeowners an aggregate $5.9 billion since it was implemented.

Another 36,000 borrowers began trial mod plans under HAMP during March.

More than 1.5 million homeowners have entered trial modifications since the program's inception. Of those, 751,000 have been canceled because the borrower fell behind on the new modified payments, was not able to provide the documentation required by the program, or was found to be ineligible for the program.

Program guidelines direct servicers to cancel or convert trial modifications after three or four monthly payments, depending on circumstances. Aged trials have previously been an issue as borrowers waited on a decision from their servicer to make the modification permanent, but Treasury says the volume of trials lasting six months or longer has now fallen to below 26,400.