May 19, 2010
April HAMP Highlights: 295,348 Modified (Out Of 3,275,249 Eligible)
The government’s Making Home Affordable Program (HAMP) has resulted in 295,348 active permanent loan modifications through the end of April.
An additional 637,353 trial modifications are in place versus 277,640 cancelled (up 79 percent from 155,173 cancelled at the end of March). 3,275,249 loans are delinquent and eligible.
Once again, roughly 2.82 million U.S. homeowners lost their properties to foreclosure in 2009 while 4.5 million new filings are expected in 2010.
∙ Making Home Affordable Program (HAMP): April Report [financialstability.gov]
∙ TARP's Special Inspector General Takes Aim At HAMP [SocketSite]
First Published: May 19, 2010 7:00 AM
Comments from "Plugged In" Readers
it was a rousing success.
the goal was to use HAMP as a carrot to keep people in their homes so that they didn't default en masse all at the same time.
HAMP spread out the duration of the pain. This will allow banks to "recapitalize" faster, and to shovel more and more money into executive bonus pools and campaign contributions to lawmakers.
If you thought HAMP was for regular homeowners then these results would have been a disappointment. However, I can't believe that anybody actually believes that HAMP had anything to do with regular homeowners.
Posted by: ex SF-er at May 19, 2010 9:19 AM
Mean back-end DTI ratio of 64.3% on modified loans. Utterly absurd.
Posted by: anon at May 19, 2010 10:12 AM
Permanent mods cancelled is only 3744 out of nearly 300,0000. Seems like they weed out the bad applicants during the trial process.
Posted by: anon at May 19, 2010 10:31 AM
"Permanent" means that the mods were approved, not that the borrowers have a hope in hell of paying them. The so-called "weeding-out" is done at the trial stage, of which about 20% of eligible mortagors were culled. You'll need data through 8/2010 before you can determine default rates.
Noteworthy is that only 28% and change of the mods involved principal reductions; most got term extensions and rate reductions, which as a practical matter means that the borrowers will end up up owing more if they hang in than if they stay.
Posted by: anon at 10:12 at May 19, 2010 12:07 PM
Right. For the new ones we will see what August brings. For the older mods, the ones that made it through the trial stage and into permanence last fall or earlier, the report shows that about 1% were cancelled during last quarter. Anecdotally, a neighbor just got his Countrycrooked/BofA first modified from a recast 8.75% down to 3% for 38 years fixed. I guess they take the first two years of the loan and count them toward the 40? Anyway, he's pleased, and he probably can afford it now.
Posted by: anon at May 19, 2010 1:13 PM
^^^cancelled is not synonymous with delinquent or in some stage of default, which latter stats are not exactly being trumpeted at the moment. BTW, according to the current OTS report more than half of all mods (HAMP & non-HAMP) are delinquent after nine months.
And lenders (and NAR) just love people like your neighbor.
Posted by: anon at 10:12 at May 19, 2010 1:36 PM
38 years fixed
No kidding? 40Y mortgages. Extend that to 60Y and you'll get Japan 1990.
Posted by: lol at May 19, 2010 1:41 PM
An important thing to note here is that the people who got added to the permanent modification rolls in April are considerably more likely to re-default than those receiving prior permanent modifications.
In the March report (see the link), the median back-end DTI was 77.5% before modification and 61.3% after modification. In the April report, these medians are 80.2% and 64.3%. Do you realize how many more bad credit profile people were added to the pool to raise the median month-to-month by that much? The same thing happened earlier, btw - February had 76.4% and 59.8%.
As you can note from the almost equal number of people who have had modifications cancelled, the re-default rate among those eligible for HAMP is extremely high already. Even among the people who got permanent modifications, the re-default rate will likely be noticeable as time goes on because of the decreasing quality in credit profiles.
Posted by: sfrenegade at May 19, 2010 2:39 PM
It's telling when they're cancelled during a trial phase, yet even though they're only 1 % after they become permanent they're bound to be something significant? Couldn't it simply be that the trial serves its purpose? It looks like HAMP has become more populated in all phases including success, trial and failure.
Posted by: anon at May 19, 2010 2:48 PM
For the older mods, the ones that made it through the trial stage and into permanence last fall or earlier, the report shows that about 1% were cancelled during last quarter.
You are confused/mistaken. Almost none of the permanent loans became permanent earlier than last fall.
Of those in the permanent status, almost all became permanent AFTER September 2009. (Only 4,742 out of the 299,092 were September or earlier).
Therefore, it took LESS than 7 months to have 1% of these mods canceled! This is a terrible number. this of course does not include the numbers that are delinquent or in default which makes it even worse.
the HAMP numbers are terrible. Unless you are a bank or a politician.
**not to mention: 22% of the loan mods are canceled before you even get to the permanent part... so the terrible 1% cancellation rate is even worse than it looks yet again.
Posted by: ex SF-er at May 19, 2010 3:41 PM
I keep seeing people wanting to argue with me, when I'm not even in disagreeement. Last fall OR earlier is what was said, so you did not contradict me. But oNe percent within 7 months is terrible to you? Why? Aren't all mortgages going to run south at least 1 % ?
Posted by: anon at May 19, 2010 3:50 PM
I'll reserve judgment until we see how permanent modifications do 9-12 months out. If the trial period is a "screening process," you have to wonder how terrible the credit profiles were of the people who flunked. Note that HAMP or not, re-default rates after loan modifications have been fairly high (50-70%) 9-12 months out through the early parts of the housing bust, as I've mentioned on several threads prior.
There have been commenters here who have suggested that newer vintage modifications would be more successful (for various handwavy reasons), but the credit profiles do not suggest this at all. If anything, it seems like the recent modifications are being done with people who are further and further in debt.
Posted by: sfrenegade at May 19, 2010 3:56 PM