Loan Mods Approved on Second Liens
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- Kara Johnson | April 02, 2011
Some 17,000 homeowners have obtained reduced monthly payments on their second mortgages through a companion program to the administration’s Home Affordable Modification Program (HAMP), the administration has announced.
It’s the first official report that’s been issued on the Second Lien Modification Program and would seem to indicate that, like its parent, the program is struggling to get started. The initiative was first announced in April 2009, right after HAMP itself, and the first lender, Bank of America, agreed to participate in January 2010.
No date was given for when the program actually began to approve second-lien modifications, although the program’s Making Home Affordable web site updated information on the second lien program in early Feburary.
Under the program, homeowners who receive a HAMP permanent loan modification are automatically eligible to have any second liens modified as well, provided those liens are serviced by participating lenders. So far, 17 lenders are participating, including the five biggest mortgage servicers – Bank of America, Wells Fargo, JP Morgan Chase, Citibank and Ally Financial/GMAC.
With over 600,000 permanent HAMP modifications approved so far, the Treasury Department, which administers the programs, says that the number of second lien approvals is certain to grow.
The HAMP program itself has been broadly criticized for falling short of expectations. When originally announced in March 2009, it was predicted that it would help 3-4 million homeowners avoid foreclosure over a four-year span. However, with approximately 30,000 new homeowners currently coming into the program a month, it now appears the program will do well to provide 1.2 million permanent modifications by the time it expires at the end of 2012.
According to today’s HAMP servicer report, which also contained the second lien numbers, just over 29,000 trial HAMP modifications were begun in February, with 26,000 permanent modifications approved. The three-month trial modifications are a preliminary step to permanent modification status.
The Treasury Department estimates there are nearly 1.4 million homeowners with delinquent mortgages who are not presently participating in the program but who would be eligible for a trial modification if they applied.
Participants who obtained HAMP loan modifications reduced their monthly mortgage payments by an median of $528 a month, or 37 percent of their pre-modification mortgage bill, according to Treasury figures.
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