Treasury Reports More Borrowers Qualifying for Permanent Mods

The administration has ""released a new report"":http://www.treasury.gov/initiatives/financial-stability/results/MHA-Reports/Documents/June%202011%20MHA%20Report%20FINAL.pdf on its flagship Home Affordable Modification Program (HAMP). Officials say more borrowers are qualifying for permanent modifications, and in less time.

[IMAGE] The rate of modifications moving from trial to permanent status under the HAMP umbrella is up to 74 percent, according to Treasury.

At the same time, conversions from a trial to permanent modification are down to 3.5 months on average, compared to an average of 5.2 months a year ago.

The number of active trials that had been sitting in this stage for six months or longer dropped to 23,000 as of the end of June 2011.

Treasury revised HAMP guidelines, effective June 1, 2010, requiring all new trials to be started using verified income. Prior to that time, some servicers initiated trials using only stated income information.

The administration attributes much of the program improvements, both in terms of homeowners qualifying

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for permanent assistance and streamlined trial periods, to the changes made for income verification.

Officials say they're also seeing a decline in mortgage defaults as the federal programs have begun to reach more borrowers upstream in the process.

At the start of their trial period, 21 percent of homeowners participating in the program to date were less than 60 days delinquent, or current and in imminent default, according to Treasury.

Servicers started 24,659 new trials during the month of June and completed 31,620 permanent modifications.

There are currently 115,515 active HAMP trials in play, and 657,044 permanent mods classified as active.

By Treasury's assessment, homeowners in HAMP modifications continue to perform well over time with redefault rates lower than those on industry modifications.

At one year, more than 84 percent of homeowners remain in their HAMP permanent modification.

Treasury cites a strong correlation between payment reduction and sustainability, with even greater results for bigger cutbacks.

More than 91 percent of homeowners whose payment has been reduced by more than 50 percent are still in the program after one year.

Homeowners receiving permanent modifications save a median of $524 each month, or 37 percent of the median before-modification payment.

Program to date, homeowners in permanent modifications have realized aggregate savings in monthly mortgage payments of approximately $7.3 billion.