HAMP 3 Years Later: 43% Stay with Obama's Mortgage Mods

Through March 2012, the Obama Administration’s primary foreclosure prevention campaign has 794,748 borrowers paying a median of $535 less in mortgage payments ­­- but that represents 43 percent of those who started modification trials over the past three years.
The remainder was unable to make the reduced payments or failed to qualify after a trial period.
Launched in the spring of 2009, the legacy of the Home Affordable Modification Program (HAMP) is that it has grown very slowly – with poor cooperation from lenders along the way – and that it has failed to assist the minimum 3 million distressed homeowners initially targeted.
But U.S. Treasury and federal housing officials have tightened and improved lender performances amid criticism from homeowner advocates and lawmakers from both sides.
And they are still working at improving homeowner sustainability to improve the rate of permanent assistance.
HAMP is expanding eligibility next month to include:  borrowers whose debt-to-income ratio is below 31 percent, properties occupied by a tenant and vacant properties that the borrower intends to rent.
Officials have also figured out that the larger the payment reduction, the greater the likelihood of retaining borrowers in modifications – if there is sufficient incentives for lenders.
Under HAMP enhancements starting in June, new incentives would pay between 18 cents and 63 cents for every dollar that lenders take off the mortgage principal, up from between 6 cents and 21 cents.
This should entice more lenders – with loans not held or backed by Fannie Mae or Freddie Mac – to increase principal reductions, which represent a small component – 52,243 permanent modifications – of those borrowers still enrolled under HAMP.
“For modifications seasoned 24 months, only 17.4 percent of modifications with a monthly payment reduction greater than 50 percent have been disqualified from the program due to missing three consecutive payments, compared to a disqualification rate of 44% where the payment had been cut by 20% or less,” states the March HAMP report released Friday.
HAMP has initiated 1,829,734 mortgage modification trials since 2009, with 794,748 remaining active in permanent modifications through March 2012, according to the latest from the administration.

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