HAMP Modifications Increase 11% in July
Servicers participating in the Home Affordable Modification Program (HAMP) raised the total number of permanent modifications to 434,716 in June, increasing 11% from the prior month's 389,198 tally, reports the U.S. Department of Treasury.
HAMP was launched in 2009 by the Treasury as a means to provide incentives to servicers in exchange for modifying loans close to foreclosure. In order for buyers to be eligible, they must make three monthly payments during the trial period and submit all necessary documentation.
In June, 45,518 trial modifications were converted into permanent status, while 4,089 modifications were canceled, bringing that total to 12,912 since the program began.
More than 45% of these loans were put into an alternative modification, but more than 30% have yet to be placed through any other process including short sale or foreclosure.
More than 11% of the canceled trial modifications, or 47,000 mortgages, have either been foreclosed on or have entered the process. Just over 2% have gone through a short sale or deed-in-lieu, and on almost 6% of them, the borrower has become current, according to HousingWire.
The most common causes of canceling a trial modification are insufficient documentation, another default during the trial stage or the borrower was deemed ineligible, reports the Treasury.
Overall, servicers have canceled 616,839 trials since the program launched last year, up 18% from the previous month. The Obama Administration set an early goal for three to four million borrowers to receive aid under HAMP before the program expires at the end of 2012. After 16 months, servicers have reached over 14% of that mark, up from just over 13% in June.
Servicers have offered three-month trial modifications through July and have started 1.3 million of them. There are currently 255,934 active trial modifications. Borrowers receiving a permanent modification received an average 36% discount on their monthly payments for an average of more than $500 a month, reports HousingWire.
According to the Treasury, borrowers with a permanent modification are guaranteed lower payments for five years and fixed terms at current market rates for the remaining life of the loan.