HAMP Modifications Begin to Slip

Progress in completing permanent HAMP loan modifications slowed in May as servicers concentrated on eliminating ineligible borrowers that had been treading water for months from their rolls. The latest Home Affordable Modification Program data show that 152,000 borrowers were dropped from the trial modifications in May, compared to 122,500 in April. Borrowers are required to make timely payments during the three-month trial period. But many unsuccessful candidates were given a free ride as servicers focused on implementing HAMP program changes and converting borrowers to a permanent modification. Housing and Urban Development secretary Shawn Donovan told reporters he is not surprised by the high number of trial cancellations. "We pushed them to do very strong quality control before they removed someone from a trial modification," he said. Meanwhile, HAMP servicers converted 47,700 borrowers from trials to permanent modifications, down 30% from April.