Residential servicers completed nearly 40,150 HAMP modifications in September, a 60% improvement from August, according to figures released by the U.S. Treasury Department.
The new Home Affordable Modification Program report also shows a jump in modifications that involve principal reductions.
Nearly 18,400 borrowers approved for a HAMP modification in September received a principal reduction, compared to just 1,300 the month before. Although the increase looks impressive, Treasury said it was due to a system reporting change that prevented servicers from reporting principal writedowns completed in prior months.
Nevertheless, the number of active HAMP loans with a principal reduction spiked to 28,900 units in September from 9,220 in July. The median principal amount reduced is $65,200.
Mortgage industry trade groups have strongly opposed mandatory principal reductions. Under the HAMP program, principal reductions are voluntary.
While HAMP servicers are required to evaluate the benefits a principal reduction would have on non-GSE loans with LTV ratios of 115% or greater, they are not required to reduce principal as part of a modification.
Meanwhile, a new Comptroller of the Currency Mortgage Metrics report shows that 98% of HAMP principal reductions completed in the second quarter involved mortgages held in a servicer's portfolio.
The GSE regulator does not permit principal reductions on Fannie Mae and Freddie Mac loans.
