Wednesday, April 14, 2010

HAMP March Data

by Bill McBride on 4/14/2010 05:45:00 PM

From Treasury: Administration Releases March Loan Modification Report


About 228,000 modifications are now "permanent", and 155,000 trial modification cancelled. There is still a huge number of borrowers in limbo. If we add the 228,000 permanent mods, plus 155,000 cancelled, and the 108,000 pending permanent mods that is only 491,000 borrowers - there were 825,000 borrowers in the program as of last November. So there are another 334,000 borrowers in modification limbo.

Here is the report. See here for a list of reports.


The second graph shows the cumulative HAMP trial programs started.

Notice that the pace of new trial modifications has slowed sharply from over 150,000 in September to around 57,000 in March 2010. This is slowest pace since May 2009 and is probably because of two factors: 1) servicers are now pre-qualifying borrowers, and 2) servicers are running out of eligible borrowers.

Debt-to-income ratios worsen

If we look at the HAMP program stats (see page 6), the median front end DTI (debt to income) before modification was 44.8% - down slightly from 45% last month. And the back end DTI was an astounding 77.5% (up from 76.4% last month).

Just imagine the characteristics of the borrowers who can't be converted!

No wonder the re-default rate is high ... from David Streitfeld at the NY Times: Defaults Rise in Loan Modification Program
The number of homeowners who secured cheaper mortgages through the government’s modification program only to default again nearly doubled in March, continuing a worrisome trend that threatens to undermine the entire program.

Treasury Department data released Wednesday showed that 2,879 loans that were permanently modified have defaulted since the program’s inception in the fall, up from 1,499 in February and 1,005 in January.
In summary: 1) the program is slowing, 2) the borrowers DTI characteristics are poor - and getting worse, and 3) the re-default rate is rising. Oh, and 4) there are a large number of borrowers in modification limbo.

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