More disappointing November housing statistics came to light yesterday. This time with numbers related to permanent modifications achieved by the President's Home Affordable Modification Program or HAMP.
The federal program processed slightly above 500,000 modifications last month, way under the target set by the Obama Administration of 3 million.
It was reported yesterday by Bloomberg News that figures supplied by the Treasury Department showed that HAMP made a total of 504,648 modifications in November. The total represents an increase of 4% over October.
HAMP was allocated $50 billion last year by Congress with the objective of reducing foreclosures. The program pays mortgage servicers and lenders to rewrite loan terms for borrowers who are in jeopardy of losing their homes. The Congressional Oversight Panel for the Troubled Asset Relief Program, in its Dec. 14 report, criticized the program as ineffective and for its failure to hold mortgage firms accountable.
Through HAMP, loan terms are adjusted to bring down monthly mortgage payments to 31% of borrowers', which is considerably lower than the national average of 45%. Last month, an estimated 30,000 borrowers who applied for HAMP were qualified. However, 8,666 modifications were canceled.
Since the program started last year, there have been 1.43 million trial modifications. Around 46% of those were revoked due to borrowers' inability to pay or comply with the requirements of the program.
Even if the numbers have not been encouraging, HAMP has benefited the housing market by giving banks and other private mortgage servicers the incentive to get on the bandwagon and offer their own loan assistance programs to the masses of hopeless homeowners out there. More than 100,000 homeowners were given modifications in November through the HOPE Now Alliance that consists of 36 private lenders, according to a separate Treasury Department report.
Wells Fargo, for instance, offered about 86% of its 600,000 customer's modifications through its own modification program, in November. In California, Wells Fargo reached an accord on Monday this week with the state attorney general to write down about $2 billion on the loan balances for nearly 14,900 home that were caught in adjustable-rate mortgages.
Since 2009, Bank of America (BoA) completed 652,000 modifications through non government sponsored programs. Through HAMP, BoA modified only 93,500 loans in the same period. As of Oct. 31, the bank had around 425,300 loans that are due for at least 60 days, data from Treasury Department showed.
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