HAMP loan modifications are performing much better than proprietary restructurings, according to the Treasury Department's latest monthly report on the program.
"At 12 months, nearly 85% of homeowners remain in permanent modifications with less than 16% of homeowners missing three consecutive payments," Treasury says.
But the Home Affordable Modification Program report does not include an exact comparison on the redefault rates of government versus proprietary mods.
A recent Comptroller of the Currency/Office of Thrift Supervision report shows the re-default rate (60 days or more past due) on proprietary mods completed in the fourth quarter of 2009 is 27.7% after nine months. Using the same OCC/OTS metrics, the comparable HAMP re-default rate is 15.3% after nine months.
The Hope Now servicers alliance said it discovered that 55% of borrowers receiving proprietary modifications saw their monthly principal and interest payments reduced by 10% or more.
Under HAMP, nearly 80% of completed modifications reduced the borrowers' monthly P&I payments by at least 20%. The average HAMP modification reduces the borrower's monthly payment by $500.
Before HAMP was launched in the spring of 2009, most loan modifications and workouts by servicers did not provide payment relief and many actually increased the borrower's payments.
To some critics, HAMP has been a failure because more than 700,000 candidates for a trial modification never were elevated to "permanent" status. (However, some of these borrowers wound up in a proprietary modifications.)
At yearend 2010, roughly 579,000 borrowers had received a permanent HAMP modification with 58,000 having dropped out of the program due to defaults and other reasons.
