HAMP Mods Finally Gathering Steam

The pace of permanent Home Affordable Mortgage Program loan modifications is now averaging roughly 50,000 a month with the cumbersome government program finally getting its legs. The Treasury Department reported that mortgage servicers completed 54,900 permanent HAMP modifications in February, up from 49,400 the previous month. To date, the Home Affordable Mortgage program has helped 170,200 homeowners secure a permanent modification that reduces the monthly payment on a first mortgage to 31% of income. Another 835,200 borrowers are in HAMP payment trials where their monthly mortgage payment is reduced by more than $500. The Obama administration's signature loan modification program was rolled out one year ago with the first 5,000 permanent modifications completed in October. Housing advocates are critical of the slow start. However, the program is still undergoing changes to simplify and streamline the process, allowing struggling homeowners to move through the three-month payment trials and receive a permanent modification. In addition, Treasury is trying to get banks to modify their second liens. "While we still have some improvements to go, we are making significant progress in terms of home affordable modifications," said HUD secretary Shaun Donovan. As the pace of HAMP modification finally picks up, the monthly activity report is showing more fallout. Treasury reported that 1,473 permanent modifications have been cancelled as of February 28, up from 1,005 in January. In addition, nearly 88,700 borrowers have dropped out of the payment trials, including 28,200 in the month of February.