The government’s foreclosure rescue program in June continued to have more borrowers cancel out of mortgage modification trials – 21 percent increase – than those approved for a “permanent” five-year reduced-payment plan - a 14 percent jump, according to the latest figures released today by U.S. Housing and Treasury officials.
The June report concedes that “cancellations continue to rise as servicers comply with Treasury” guidelines to determine whether homeowners in trials can be upgraded to permanent status.
About 45 percent of homeowners in canceled trials entered an alternative modification program, based on data from the eight largest participants in the Obama Administration’s Home Affordable Modification Program, HAMP.
Fewer than 2 percent of homeowners in canceled trials went to foreclosure sale, the report states.
But the latest monthly update is another remainder of HAMP’s futile attempts to help desperate borrowers and alleviate a persistent foreclosure crisis. The number of foreclosure notices may increase in coming months as the number of homeowners who have cancelled out of modification trials surpassed 520,000, or about 41 percent of all trails started.
In comparison, 389,198 borrowers have been approved for the full five-year program, or about 30 percent of all trials started. Homeowners in permanent modifications see a median payment reduction of 36 percent, or more than $500 per month.
The U.S. Department of Housing and Urban Development and the U.S. Treasury today also released its July Scorecard on housing market initiatives.
Here are the highlights:
- Since April of 2009, record low mortgage rates have helped more than 7.2 million homeowners to refinance, resulting in more stable home prices and $12.9 billion in total borrower savings.
- Over twice as many homeowners were helped compared to foreclosure completions: Nearly three million borrowers have received restructured mortgages since April 2009, outpacing the 1.24 million foreclosure completions for the same period. As more families are able to remain in their homes, household assets continue to rise with $1.1 trillion in home equity gained since April 2009.
- Servicers report the number of homeowners receiving restructured mortgages has increased to a new total of 2.95 million, including more than 1.2 million homeowners under HAMP trial modifications and nearly 400,000 benefiting from FHA loss mitigation activities. However, cancellations from HAMP trial plans remain high as many borrowers who received temporary modifications were not able to meet eligibility requirements such as verifying their income and successfully making trial payments.
- Also included in the Scorecard is HUD’s Neighborhood Stabilization Program (NSP), a $6 billion effort to help local jurisdictions address the foreclosure crisis by allowing grantees to acquire foreclosed homes and repair, redevelop, rent or sell them to low and moderate income households. Nearly $2 billion in Recovery Act funds were awarded in the second round of NSP grants.
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