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Treasury: Nearly 5,000 HAMP Mods Carry Principal Reductions

""Treasury"":http://www.treasury.gov released new numbers for the Home Affordable Modification Program (HAMP). New this month is data on the program's Principal Reduction Alternative (PRA).
[IMAGE] Servicers have cut principal balances on 4,938 permanent HAMP modifications under the PRA initiative. Twenty-seven of these have fallen out of the program as 4,911 PRA mods are listed as active.

In addition, there are currently 16,017 HAMP trials in force that have also received principal reductions.

Treasury says homeowners who qualify see significant benefits. The median principal amount reduced for active permanent modifications is 32.2 percent, or about $69,500.

PRA requires servicers of non-GSE loans to calculate the benefit of principal reduction for mortgages with a loan-to-value ratio of 115 percent or greater when evaluating a homeowner for a first-lien HAMP modification.

While servicers are required to evaluate homeowners for PRA, they are not required to reduce principal as part of the modification. Fannie and Freddie do not participate in the PRA initiative.

This ""month’s report"":http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Documents/May%202011%20MHA%20Report%20FINAL.PDF also includes expanded detail on the Home Affordable Foreclosure Alternative (HAFA) and Second Lien Modification (2MP) programs.

The report shows that 1,428 HAFA transactions were completed during the month of May, bringing the total for

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the program to 8,541. Short sales take the majority. They total 8,309; HAFA deeds-in-lieu tally 232.

Another 9,240 HAFA agreements have been put in place between the servicer and the homeowner for terms of a potential short sale of DIL. Treasury notes that a short sale takes at least 120 days to complete under the program.

Among servicers, ""JPMorgan Chase"":http://www.jpmorganchase.com is utilizing HAFA the most, having started 6,120 transactions and completed 2,686.

Next in line is ""Wells Fargo"":http://www.wellsfargo.com with 5,328 HAFA starts and 2,478 of those completed.

2MP provides assistance to homeowners in a permanent first-lien HAMP modification who have an eligible second lien with a participating servicer.

There are 27,105 active second-lien modifications. Another 1,524 program mods involved full lien extinguishments.

""Bank of America"":http://www.bankofamerica.com leads the 2MP results with 12,315 second-lien mods started and 1,341 second liens extinguished.

The administration’s flagship program, HAMP, added 32,398 permanent modifications to its tally in May. There are 633,459 permanent mods in active status; 97,992 permanent plans have been canceled because the borrower missed three consecutive payments.

Servicers started 26,689 new HAMP trials in May, with 126,751 trial plans currently active. Treasury says homeowners who enter a trial modification now have a high likelihood of securing a permanent modification and realizing long-term success in the program.

Of homeowners who have begun trial mods since June of last year, Treasury says 71 percent were granted permanent modifications with an average time to convert of 3.5 months. Officials note that the number of trials lasting six months or longer continues to decrease.

Homeowners receiving permanent modifications have realized aggregate savings in monthly mortgage payments of more than $6.8 billion to date.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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