HAMP Hits 500,000 Trials
Washington-Servicers have placed over 500,000 borrowers in 90-day trial loan modifications, a benchmark goal the Obama administration set to mobilize the industry.
Servicers were challenged to meet the half-million mark by Nov. 1 and breezed through a few weeks before the deadline.
"We are pleased with industry efforts thus far in reaching the 500,000 trial HAMP modifications, but more work needs to be done," said Steve Bartlett, president and chief executive of the Financial Services Roundtable.
Treasury officials said the goal succeeded in pushing the servicers to ramp up their implementation of the president's Home Affordable Modification Program faster.
But they still want servicers to improve their responsiveness to borrowers during the modification process.
"The administration believes more can and should be done to assist struggling homeowners and to stabilize the housing market," according to a Treasury statement.
Treasury officials met with the HAMP servicers last week and agreed to streamline some of the documentation requirements.
"A common application form and reduction in paperwork will help servicer efficiency and create a more positive experience for homeowners," said Hope Now executive directive Faith Schwartz.
Hope Now is an offshoot of the roundtable and represents most of the 47 participating HAMP servicers.
Meanwhile, a Federal Housing Administration loan modification program that was rolled out in August is gaining traction with larger residential servicers.
"We're seeing some surprising activity with that program," FHA commissioner David Stevens told Mortgage Servicing News.
The FHA 'Home Affordable Modification Program' (HAMP) allows servicers to reduce the current principal amount of an existing FHA mortgage by up to 30% to make the monthly payments affordable. Servicers can file partial claims for the principal reduction and the borrowers end up carrying a zero-interest lien for the deferred principal. HAMP is a permanent program that also allows servicers to reduce the interest rate, extend the term of the loan and employ all of FHA's loss mitigation tools, said Bob Lyons, a servicing consultant with Lyons and McCloskey in Fairfax Station, Va. "FHA HAMP is all the home retention options rolled into one and supercharged," Mr. Lyons said.