20 Percent Re-Default Rate Seen on HAMP Modifications

February 1, 2011 No Comments »


The Treasury included performance of permanent loan modifications in its latest Home Affordable Modification Program (HAMP), revealing that 20.4 percent of year-old mods were already 60+ days delinquent.

Additionally, 15.3 percent of permanent loan modifications were three or more mortgage payments behind (severely delinquent) as of the December report.

The good news is that newer loan modifications appear to be performing much better, though only time will actually prove that.

As expected, delinquency rates were lower for modifications that reduced monthly mortgage payments by more than 30 percent versus those that decreased payments between 20-30%, and those where payments were lowered by less than 20 percent.

The 60+ day delinquency rate was 16.0 percent, 24.7 percent, and 32.5 percent, respectively.

So mortgage payment seems to matter, not just home price depreciation and the level of negative equity.

HAMP Permanent Mod Cancellation Rate Exceeds 10 Percent

Last month, 30,030 permanent loan modifications were started, bringing the total to 579,650 since the program began.

However, 12,048 permanent mods were canceled in December, well above the 9,000 canceled a month earlier, bringing the total number of cancellations to 58,020 and the rate of cancellation to just over 10 percent.

So maybe it’s accurate that only about 700,000 foreclosures will be prevented under HAMP – at least the re-default rate doesn’t seem to be as high as the 75 percent clip Fitch predicted.

Meanwhile, the FHA-HAMP program (for FHA loans) finally got underway, with 1,871 trials started and 643 permanent mods active.


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