HAMP Default Rate to be Revised

July 28, 2010 No Comments »


Last month’s Making Home Affordable Program report included delinquency data for the first time, revealing that just 4.1 percent of the 126,527 loan mods made permanent in the first quarter of 2010 were 60+ days late.

It also noted that 1.3 percent were already 90+ days late.

The data certainly raised some eyebrows, as previous research indicated somewhere between 65 percent and 75 percent of modified mortgages may re-default after 12 months.

That led Treasury to remove the delinquency data from the most recent report and replace it with the following statement:

“Since the Making Home Affordable report was posted on July 20th, Fannie Mae, which administers the program, has reported to Treasury an issue in its implementation of the delinquency statistic methodology used to report performance of permanent modifications.

Fannie Mae is now revising the data, and Treasury has retained a third‐party consultant to provide additional review and validation. Upon completion of that independent review, a revised table will be provided.”

As CalcRisk aptly pointed out, with a median back-end debt-to-income ratio of 63.7 percent on permanent mods, there’s a good chance many borrowers will eventually re-default.

Unfortunately, it seems as if banks, servicers, and the Treasury are more focused on “hitting the numbers” than actually carrying out quality loan mods.

They’ve already sent out roughly 38-51 percent of the of 3-4 million modification offers they wanted to complete by 2012, but it will mean very little if most end up back in foreclosure.

(photo: istolethetv)

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