Residential servicers completed just 13,850 HAMP modifications in September compared to 60,600 proprietary restructurings, according to recent figures released by the Treasury Department. 

Overall, Treasury reported that servicers completed 47,100 Home Affordable Modification Program restructurings in the third quarter, down slightly from 49,950 in 2Q.  

However, HAMP modifications fell 50% from the third quarter of 2011. The general explanation is that there are fewer borrowers who can qualify for the program. 

HAMP has strict requirements, while servicers have the ability to be flexible in qualifying borrowers for their own proprietary modification programs.

It appears that more borrowers with non-GSE loans are benefiting from principal reductions.

Treasury found that the 4,550 HAMP modifications completed in September involved, on average, a $65,000 reduction in the principal amount of the newly modified loan.

Meanwhile, servicers that belong to the Hope Now alliance reported a 41% jump in proprietary mods in the third quarter. These firms completed 186,060 proprietary restructurings in 3Q, compared to 131,550 units in the prior quarter.  

It also appears that the $25 billion national foreclosure and servicing settlement is giving proprietary modifications a boost.  The settlement between five mega-servicers and the state attorneys general encourages principal reduction.  But Hope Now has not included data on principal reductions in its monthly reports.

Subscribe Now

Authoritative analysis and perspective for every segment of the mortgage industry

30-Day Free Trial

Authoritative analysis and perspective for every segment of the mortgage industry