HAMP servicers completed 51,200 permanent modifications in June, a 7% improvement from May, but also dropped a record 91,100 borrowers in payment trials from the program.
Overall, the Home Affordable Modification Program has helped nearly 400,000 struggling borrowers reduce their mortgage payments to 31% of monthly income as part of permanent modifications to their residential loans.
But 520,800 mortgagors that attempted to qualify by completing the three-month payment trials fell short and their trials were cancelled by servicers.
"Cancellations of trial modifications continued to rise in June," said Treasury assistant secretary Herb Allison, announcing the new HAMP numbers.
Earlier in the year, Treasury pressed mortgage servicers to increase their conversion rate and clear up the backlog of trial modifications that failed to qualify for permanent relief.
The most common cause of terminated trials is incomplete documentation where borrowers failed to verify income, or missed payments. Also some candidates were disqualified because they already had a mortgage payment below the 31% DTI ratio.
Meanwhile, new requirements for servicers to verify a borrower's income have slowed the intake of candidates into HAMP trials. Nevertheless, 38,700 consumers signed up for the trials in June, up from 30,100 applicants in May.
"We should see a much higher conversion rate to permanent modifications as homeowners enter verified trials plans," the Treasury official told reporters.
