Residential servicers completed 73,000 proprietary loan modifications in January, down 10% from the previous month, according to new figures released by Hope Now.
Overall, mortgage firms completed 101,000 loan restructurings, including nearly 28,000 modifications that meet the specifications of the government's Home Affordable Modification Program.
Despite the decline in modifications, it still outpaces the 73,000 foreclosure sales that servicers completed in January, according to Hope Now executive director Faith Schwartz. "Hope Now is encouraged by the fact that the trend of permanent modifications to completed foreclosure sale continues to be favorable," she said.
Meanwhile, congressional Republicans are trying to kill the HAMP program while touting the success servicers are having with proprietary, private sector modifications.
According to recent congressional testimony, HAMP has not produced the volume of modifications that the Treasury Department initially hoped for.
Nevertheless, "We believe HAMP has been instrumental in standardizing and streamlining the industry's modification process and in that way has contributed greatly to the rise in non-HAMP modifications that have taken place over the past two years," said Patrick Lawler, chief economist of the Federal Housing Finance Agency, testifying before Congress.
However, figures compiled by the Comptroller of the Currency and Office of Thrift Supervision show that proprietary modifications have higher re-default rates than HAMP restructurings. Regulators found that a proprietary mod reduces a borrower's monthly payment by an average of $396, compared to $585 for a HAMP loan.
