Mortgage servicers completed 31,600 HAMP modifications in June, including 2,000 restructurings that involved principal reductions, according to a new report from the Treasury Department.
June's Home Affordable Modification report found that 115,500 borrowers are in payment trials with 18,200 receiving a trial principal reduction.
So far, only 7,000 struggling homeowners have received a permanent principal reduction under HAMP. But the median principal amount reduced is nearly $67,500 or 30% of the loan amount.
Treasury officials hope the number of principal reductions will accelerate in the coming months. (Loans guaranteed or owned by Fannie Mae and Freddie Mac are not eligible for a principal reduction.)
Over the past 12 months, servicers completed 30,000 HAMP modifications per month with the re-default rate remaining fairly steady.
Only 20% of HAMP modifications are 60-days or past due 12 months after restructuring, and "more than 84% of homeowners remain in the program," Treasury says.
Citigroup chief financial officer John Gerspach recently told investors and analysts that the re-default rate on Citi's HAMP modifications is less than 15%. But he expects the pace of modification activity will slow going forward. "As a result, delinquency rates may deteriorate," Gerspach said during a conference call.
