The pace of government-backed loan modifications picked up in March, with both new trials and permanent modifications approved under the Home Affordable Modification Program (HAMP) up significantly.
The Treasury Department reports that 36,400 homeowners were approved for permanent HAMP loan modifications during the month, an increase of more than 10,000 from February. It was the most permanent HAMP modifications approved in a single month since last July.
New admissions to the the HAMP program rose to 36,400, up from 29,100 in February and the most trial modifications begun since December. Borrowers qualifying for HAMP must complete a three-month trial period before they can be approved for permanent modifications.
Homeowners qualifying for HAMP modifications lowered their monthly mortgage payments by a median 37 percent, or more than $500 a month.
New admissions and permanent modifications approved under HAMP are have slowed significantly from the first year of the program, since the government tightened requirements for trial modifications. However, the percentage of trial modifications approved for permanent status has improved significantly.
The Treasury Department reports that since income verification requirements were implemented last June, 68 percent of eligible trial modifications have been approved for permanent status, compared to 43 percent prior to that date. Another 23 percent are pending a decision; there are still 1 percent of pre-June 2010 trials that have yet to be resolved.
To date, the Treasury Department reports that there have been 670,000 permanent HAMP modifications approved since the program began in March 2009, of which 83,000 have been cancelled. A total of 1.56 million trial modifications have been initiated, of which 751,000 have been cancelled and 137,000 remain as active trials.
Treasury estimates there are currently another 1.34 million homeowners who are at least 60 days delinquent on their mortgages and who would qualify for the HAMP program. To qualify, borrowers must occupy the home as their primary residence, owe less than $730,000 on their mortgage, be facing a financial hardship and have the means to keep up with a modified payment structure.
Those who qualify have their mortgages modified to reduce their monthly payments to no more than 31 percent of gross income, subject to the approval of their mortgage servicer.