Last month the Administration released its first report on the number of homeowners helped by its Home Affordable mortgage modification program known as HAMP. While the numbers of trial modifications in the first three months of the program (250,000) may sound impressive, it is much less so when compared with what the industry was doing voluntarily before the HAMP program. Get this, mortgage servicers changed around 370,000 mortgages in the first quarter of 2009 before the HAMP program was put in place.
To be frank, it is likely that May, June and July saw some combination of pre-HAMP voluntary modifications that were already in the working pipeline. Nevertheless, the Administration’s goal to help 3 million homeowners sounds less impressive compared to the three-year timetable it took to settle out the 100,000 homeowners helped per month.
The true measure of HAMP’s success will be when we see foreclosure filings and sales begin to return to pre-crisis levels. On the other hand, the HAMP program has improved the quality of modifications immensely. According to the Administration press release, 100% of HAMP modifications will lower the borrower’s monthly payment. Voluntary modifications before were only reducing payments in 50-60% of cases. Ultimately the new HAMP program will stimulate the not-so-good performing servicers to step their game up.