In a reversal of recent trends, the number of loan modifications granted under the government's Home Affordable Modification Program (HAMP) rose in November, in a bit of good news for both homeowners and the Obama administration's much-criticized anti-foreclosure program.
Nearly 30,000 homeowners were approved for permanent loan modifications under HAMP, over 7,000 more than were approved in October and the first increase in permanent modifications since June. In addition, over 31,000 borrowers were approved for trial loan modifications, the entry step into the program, an increase of more than 5,000 over the previous month, according to figures released by the Treasury Department today.
In addition, the number of homeowners with FHA mortgages who received "loss mitigation interventions," a category that includes loan modifications, increased by two-thirds, to 53,000, up from 32,000 in October. FHA borrowers do not qualify for HAMP, but have separate programs available to them.
Loan modifications under HAMP and new admissions to the program have generally been declining since last spring. Despite the current uptick, it seems clear the program will fall short of its initial goal of assisting 3-4 million homeowners in avoiding foreclosure.
Since the program's inception in March 2009, only 550,000 homeowners have been granted permanent loan modifications under HAMP, 50,000 of which were later canceled. The Treasury Department calculates there are currently 1.5 million mortgage-delinquent homeowners who might qualify for the program, ten times the number of active trial loan modifications now underway.
Another 652,000 have obtained FHA loss mitigation interventions, although not all of those are loan modifications and some involve forfeiture of the home short of foreclosure. Another 1.9 million have obtained proprietary loan modifications from their lenders under the auspices of HOPE NOW, a collaborative effort of lenders, consumer agencies and government.
Overall foreclosure activity was down steeply in November, falling 21 percent as many lenders froze foreclosure proceedings in order to straighten out documentation problems associated with the robo-signing controversy. The Treasury Department expects this to be a temporary decline, however, as lenders straighten out processing issues and resume foreclosures in the months ahead.