Tuesday, December 08, 2009
The monthly report on home loan modifications under HAMP (Home Affordable Modification Program) will be released by the Treasury Department on Thursday, for the first time containing data on "permanent" loan mods (where borrowers not only make three monthly payments but provide all required income verification), but based on Congressional testimony today it seems to be nearly a complete failure.
Via Daniel Indiviglio at The Atlantic comes this revealing data.
The prepared testimony (.pdf) of Ms. Molly Sheehan, Senior Vice President at Chase Home Finance spoke to this problem. Here's one snapshot of Chase's experience in making modifications permanent:It's not clear why there's such a big discrepancy between the Chase program and the government programs but, one theory about the entire effort that seems to be getting more and more attention is that borrowers are simply using this as a stalling tactic to stay in their home a bit longer, all the while knowing that there is no way they can remain there.
In that chart, the three columns are as follows: HAMP represents modifications under the Obama administration program; CHASE represents its own proprietary modification program; and GSE/FHA/VA represents Government Sponsored Entity modification programs.
As you can see, the government-driven modification programs are doing pretty poorly. A mere 8% of HAMP modifications are approved to be made permanent. The GSE programs aren't doing much better, at only an 11% success rate. Meanwhile, Chase's own modification program is doing comparably very well with almost half likely to be made permanent.