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Tuesday, December 08, 2009

Treasury: "Thousands of Borrowers" have received Permanent Modifications

by Calculated Risk on 12/08/2009 10:53:00 AM

From Bloomberg: Most Targeted for Mortgage Relief Don’t Qualify, Official Says

A majority of the 3.2 million borrowers targeted by the U.S. Treasury Department for mortgage relief under the administration’s foreclosure prevention program are unlikely to qualify, an agency official said.
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Although we know that not every borrower will qualify for a permanent modification, we are disappointed in the permanent modification results so far,” said Allison, who is the former chief executive officer for federally controlled mortgage- finance giant Fannie Mae.
Testimony from Treasury Assistant Secretary for Financial Stability Herbert Allison: “The Private Sector and Government Response to the Mortgage Foreclosure Crisis”
The Home Affordable Modification Program (HAMP), which provides eligible homeowners the opportunity to significantly reduce their monthly mortgage payment, is a key part of this effort, designed to help millions of homeowners remain in their homes and prevent avoidable foreclosures. As of November 17, over 680,000 borrowers are in active modifications, saving an average of over $550 a month on their monthly mortgage payments. Servicers report that over 900,000 borrowers have received offers to begin trial modifications.
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Our most immediate and critical challenge is converting trial modifications to permanent modifications. All mortgage modifications begin with a trial phase to allow borrowers to submit the necessary documentation and determine whether the modified monthly payment is sustainable for them.
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Currently servicers report that about 375,000 trial modifications will have finished a three month trial period with timely payments before 12/31/2009. Informal survey data from servicers indicate receipt of complete documents in about 30% of active trial modifications – these modifications where borrowers have returned all required documents need to be decisioned by servicers as quickly as possible. For other borrowers, servicers report that the large majority are current on their payments, but have some of the required documentation missing from applications. Housing counselors and homeowners report that servicers are losing documents, while servicers report that homeowners are not providing documents despite repeated outreach. Thousands of borrowers have successfully converted trial modifications to permanent modifications – but this is a low number compared to the total number of trial modifications.
Only "thousands" of borrowers? Ouch. The actual data should be released this week.