Home Affordable Modification Program activity continued to lose momentum in October as the number of homeowners granted permanent modifications and the number of candidates entering the three-month payment trials declined.
The Treasury Department reported that HAMP servicers completed 23,750 permanent modifications in October, down 15% from the prior month. Only 26,130 delinquent borrowers qualified to enter HAMP payment trials, down 26% from September.
After 36,300 re-defaults, there are currently 483,342 homeowners that have received HAMP modifications and are still current.
At a congressional hearing on Thursday, Rep. Maxine Waters, D-Calif., pointed out that only 36% of homeowners that have been offered trial modifications have obtained permanent modifications.
"I think it is safe to say that HAMP is not meeting its goals of preventing foreclosures," the House Financial Services subcommittee chairwoman said.
She blamed the "speed-driven, corner-cutting operations" of mortgage servicers.
While Treasury has not levied any monetary penalties against servicers, the department has required servicers to change their processes and re-evaluate homeowners for a HAMP modification, according to the chief of Treasury's Homeownership Preservation Office Phyllis Caldwell.
Caldwell said servicers are required to certify they considered HAMP and other home retention options before initiating foreclosure proceedings and Freddie Mac is currently reviewing compliance at 10 of the largest servicing shops.
In cases on non-compliance, "Treasury will direct servicers to take appropriate action, which many include suspending foreclosures proceedings and re-evaluating the affected homeowners for HAMP," she testified.
