HAMP Update: Twice As Many Homeowners Kicked Out Of Obama Foreclosure Program As Given Permanent Relief, New Data Show

More than twice as many homeowners were kicked out of the Obama administration's signature foreclosure-prevention program last month as were granted permanent relief, new data released Monday show.

More than 123,000 homeowners were bounced from the administration's Home Affordable Modification Program in April versus about 60,000 who were offered five-year plans of lowered monthly payments.

This is the first month since the administration started reporting cancellation figures that the number of canceled modifications outpaced the number of new permanent modification offers.

The number of canceled modifications skyrocketed 82 percent in April compared to March.

"I think it's important to remember that our focus has been on getting homeowners in trial modifications through the decision," said Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office, during a conference call with reporters. "As those decisions get made, it's certainly expected that there would be some that would fall out of HAMP and be considered for other foreclosure alternatives."

"The number is a very, very small percentage of the total amount of permanent modifications," Caldwell added.

More than 295,000 homeowners currently are in five-year modification plans, which are considered "permanent" because the interest rate won't increase very much over the life of the loan. Interest rates are at historic lows.

There were more cancellations in April than there were new permanent and trial modifications combined. The number of cancellations was about 27 percent higher than the number of new trial and permanent plans, according to Treasury Department data.

"I think it's great to take these numbers in context... with the broad efforts to stabilize the housing market," said David Stevens, chief of the Federal Housing Administration. Stevens pointed out that home prices and the number of new foreclosures have started to stabilize. He credited the administration's efforts in keeping down interest rates with helping homeowners to refinance their existing mortgages into lower rates, resulting in lower payments.

Trial modifications have been offered to more than 1.2 million homeowners during the year-long program.

"You know, while enabling eligible homeowners to modify their mortgages is vital to addressing the housing crisis with HAMP, it's also extremely important to keep this in context that this is just one part of the administration's comprehensive approach to assisting homeowners and stabilizing the housing market," said Stevens, assistant secretary for housing at the Department of Housing and Urban Development.

"We don't claim that the housing market is totally out of the woods, but it's certainly showing signs of stabilizing," added Herbert M. Allison Jr., assistant secretary for financial stability at the Treasury Department.

Allison pointed to the fact that the program, part of the administration's $75 billion effort to stem the rising tide of foreclosures, initially allowed homeowners to state their income when applying for three-month trial plans, rather than submitting documents proving their income. That's played a large role in the number of cancellations, he said.

The program lowers homeowners' monthly payments by reducing their mortgage payments to 31 percent of their monthly income. Beginning in June, the initiative will require homeowners to prove their income before qualifying for a trial modification. Mortgage servicers have already begun to apply this upcoming requirement.

Allison predicted that by June, after servicers clear through the stated-income trial mods, "we will see a higher level of permanent modifications."

The conversion rate of eligible trial plans to permanent status is currently at about 30 percent, Treasury data show. Allison said it "eventually will be about 100 percent" since servicers will be requiring documentation up front.

He cautioned that "perhaps" more homeowners also will be bounced from the program.

Christina Marie Fierro contributed to this report.

Comments

[flyswat]

09:03 PM on 06/25/2010

Here is how I would have dealt with the foreclosure situation starting approximately two years ago, alas an obvious adaptation has been ignored by the powers that be whom bailed out banks:

Borrowers would have been allowed to stretch the years, which is NOT indulging "moral hazard" for free-ride.

A 30 year mortgage of 360 months would be allowed to be amortized up to 40 or 50 years, and by gosh up to 100 years in seemingly impossible drowning-recession circumstances charaterizing the economic reality of today.

Uncle Sam guarantees or insures the modified mortgages, and thus the mortgage becomes as secure as Treasury bonds.

No penalty for sooner than scheduled payoff.

Whether these recession special modified mortgages are to be easily assumable is another question.

One federal govt backed modification per person/mortgagee.

Interest rate would be set at no more than five percent.

I have regarded the concept as basis for recovery, and perceive it could be implemented now to STOP FORECLOSURE DISEASE which is hurting all.

[catriley]

11:24 AM on 05/20/2010

The point of the program is to modify the mortgage into something they can afford. The program also features a trial at a new payment, but people are not fulfilling that obligation, and falling behind once again.

Instead of thinking in the way that they're "kicked out", the truth is that their either unable or unwilling to abide by the program's rules. And the banks are unwilling to hire enough competent staff to get these loans either adjusted or off the books. HUGE problem is homeowners who can't seem to get the forms in that are needed, and seem to be incapable of basic tasks like getting copies of bank statements.

[SaharaRN]

06:03 AM on 05/20/2010

We are moving, our home foreclosed. I had great credit, a great career, great fixed rate, a big down-payment. Please don't place assumptions or judgments on people. I got sick with a serious illness in the middle of the housing market fall. I exhausted my paid sick leave & savings, I am now on disability. I managed to hold off on foreclosure until my kids were raised, my youngest is now in the Army and headed for Afghanistan.

We made 4 attempts at loan modification without responses & our lender sold our loan many times. We found out our home foreclosed when the Realtor-mediator showed up. He was not surprised by our story because he has not met ONE person in our region whose loan was modified even though some applied up to 10 times. Who got rich off of that enormous bail-out? If they directly paid loans people would have their pride and be able to help themselves & their communities! I would love to see a breakdown of where it went! Apparently banks used it to buy a LOT of EMPTY homes that are over priced for any consumer to afford.

I refuse to believe that my only son is going to risk his life for a country without hope, so hope is what I will cling to. Hope, love, & kindness--no matter how hard life is now--because in the end, those 3 things are all that really matters.

[time4change2009]

08:07 PM on 05/19/2010

What the "experts" of the media never report is the fact that the majority of homes going into foreclosure are not new purchases by scandalous people trying to get something for nothing. The VAST MAJORITY of foreclosures are people who owned their homes for many years....built up equity....then REFINANCED....got cash out for certain needs or wants (including bill consolidations). The problem was in the con pitch used by mortgage brokers who A) didn't clearly explain Adjustable Rate Mortgages B) Pushed non-stop the idea that property values would ALWAYS increase C) Even pushed that you would be able to re-fi again in 5 or so years...since the value would have appreciated. But the ARM's kicked in....the monthly payments became unaffordable....and BINGO. Big problems....leading to loss of home. It was a giant circle of greed combined with an over sense of trust which lead to the current state.

[Winston120]

04:51 PM on 05/19/2010

Obama has moved on from foreclosures many months ago. As usual he declared victory and moved on and so did Congress.

Obama believes what is good for Goldman Sachs is good for the USA.

But y'all keep dinkin' that OKoolaid, hear?

[Joseph Furtenbacher]

06:27 PM on 05/19/2010

Winston120: But y'all keep dinkin' that OKoolaid, hear?

What are you dinkin'?

[catriley]

11:28 AM on 05/20/2010

Yes... how we all long for the good old days when the economy was so incredibly special, and the surplus kept on growing. Darn that President Obama coming in here and destroying all of the wonderful things that Bush did for us. You know, like creating all those jobs, and creating a robust housing market, and refusing to bail out anyone, and not borrowing trillions for a pointless war. Oh wait.. never mind.

The chickens have come home to roost, and they belong on a ranch in Crawford, Texas. But as usual, the clean-up staff gets the blame for not getting foie gras stains off the carpet fast enough.

[Joseph Furtenbacher]

03:41 PM on 05/28/2010

catriley said,

The chickens have come home to roost, and they belong on a ranch in Crawford, Texas. But as usual, the clean-up staff gets the blame for not getting foie gras stains off the carpet fast enough.

My only concern is they may be spending too much time eating the leftovers:)

[Joseph Furtenbacher]

12:41 PM on 05/19/2010

Having read through the comments, I have (as usual) a few questions.

If you have successfully weathered the storm, are you willing to admit, like me, that maybe luck played a small part, or do you believe you earned every penny through your hard work in choosing the right birthplace and upbringing? Have you ever thought about German Jews watching their neighbors being led away, convinced it could never happen to them?

If you're having problems, are you willing to admit that maybe your behavior played a small part, or did you, like me, cringe every time you heard the phrase "shop till you drop"? Are you willing to spend some time learning how you can help provide honest government, quality housing and health care, and sustainable employment for every American, or are you convinced that venting on Huffpo is the best way to reform corrupt politicians and greedy bankers?

When's the last time any of you asked what you could do for your country instead of the opposite?

p.s. Personally, I would have encouraged home ownership by levying taxes similar to Social Security on landlords and tenants, but that may just be my philosophy, psychology and economics talking.

[middlekid2]

11:34 PM on 05/25/2010

I am with you all the way down the line - except on the p.s.

In 1989 my husband and I decided to build a duplex. The reason was two fold - a) A place for our aging parents to live if they needed it. b) We nicknamed the property Social Security, because we felt (21 years ago) that whatever amount we ended up paying into the Social Security system, would NOT be there when we were retirement age. So, as long as we have paying renters - we will have some income in our "old greezer years" We were just betting against a government ran program and don't have plans to ask the government for help. Hope it works out for us.

We have always paid taxes on the income and true - the income is/was not subject to social security. But, just knowing the people that we have rented to over the years - many were not "mortgage worthy", nor were they even interested in ALL that goes into owning a home.

[Joseph Furtenbacher]

05:51 AM on 05/28/2010

I can't fault you for betting against a government program, given the chronic dearth of statesmen. Perhaps a similar feeling led me to say "I would have". I would also have sworn an oath to live on the median income (plus security expenses:( of my constituents, for my terms of office plus one for good measure. (I realized years ago that people who do the right thing for the wrong reasons are probably doing many wrong things.) In my world, insurance would be invested in abatement (in this case, condos), but even unmotivated renters could use a "reverse mortgage" to enjoy their retirement more.

It's good that you pay your taxes and do not ask for help; but do not even the tax-collectors do the same?:) (On my comments page (should you choose to accept your mission), you'll find I prefer a colorful turn of phrase to a colorless lecture.) In an emergency, even you might find yourself faced with asking the government for help - and hoping they respond in time.

p.s. Perhaps you would be interested in my ideas on a progressive real estate tax, under which owners of mansions would either spend less on getting away from it all or open bed-and-breakfasts:)

p.p.s. Have you ever thought about childless renters being led away to government retirement homes?

[Frank W Abernathy]

11:21 AM on 05/19/2010

I think I understand why Jesus said the rich man went to hell, not just because he's rich but because of the way he got his ill-gotten gains. The rich will soon be getting a taste of their own medicine when the oil slick soaks their fancy east coast beaches. Sad for everybody else. I read an article about a woman who owned her home (no mortgage) and was foreclosed on to pay off a water bill in Baltimore. A damn water bill! This kind of activity is a guaranteed ticket to an unhappy eternity for those who engage in it. Yet, people can rationalize anything, even thinking they're doing a public service by legally stealing other people's stuff.

[mmurphy1980]

10:54 AM on 05/26/2010

Frank, no offense but you have no idea what you are talking about. Or the story you heard was completely incorrect. You can not foreclose on a home without a mortgage loan, it is impossible. The reason it is impossible is because when you pay off your loan, the bank sends you the title and you own it free and clear, meaning no one can take it from you for any reason (unless the government decides it wants it for eminent domain!). Plus, this woman has her home paid off and she can't pay a simple water bill? How much was the water bill? Does she not have income? Boy if I didn't have to pay my $2,300 mortgage payment every month I would have that much more money to pay bills!!

[Siebenstein]

05:29 AM on 05/19/2010

and the administration looks on........................

deliberate? most likely yes !

[Twayn]

07:11 PM on 05/18/2010

Once again I have to shake my head. For those who defend the banks here, I would point out that they now have this process of creating and milking asset bubbles down cold. Before they dragged us all into the current recession, they also manufactured the family farm crisis of the 80s. In that case, the banks artificially inflated the value of farm land, then loaned farmers money against the increased value. When the asset bubble they inflated burst because of a big drop in agricultural commodity prices (farm land is valued by how much it can produce), thousands and thousands of family farmers were suddenly upside down on their loans and couldn't make their payments. The banks foreclosed, the farmers and their families were kicked out, and the auctioneers sold off the land and the equipment -- usually to large agribusinesses who just happened to be waiting in the wings to pick up a deal. So, the banks made money, the farm implement manufacturers and dealers made money, and the agribusinesses got bargain basement prices on farmland. But the farmers? They got the shaft.

[loki]

04:40 PM on 05/18/2010

This reform was doomed from the get go when the banks were given the authority to decide who gets help. It should have been completely out of their hands. Its the same as giving the drug cartel the authority to decide who the DEA can arrest.

[viper234]

03:42 PM on 05/18/2010

Those who lost jobs, had their incomes drastically reduced, used their retirement savings to live on while looking for jobs that simply are not there deserve to lose their homes. But big banks, just hand them trillions. Every simpleton in this country is for that it seems. No accountability for them. If they couldn't afford their losses, they should be able to keep their big banks, right? And they not only kept their banks, they took trillions of taxpayers dollars and made even more money with that. But I guess it's just more satisfying to jump all over homeowners like a bunch of bullies. I bet if a big bad bank CEO went strutting down the street, all the low self-esteem bullies would get down on their knees, empty their pockets, and give away their money again, buying more fear mongering about the "nation on the verge of collapse." After another fleecing, they'd go back to beating up homeowners who lost their jobs and homes because the big banks took risks they couldn't afford. "It's the homeowners who are to blame. They bought something they couldn't afford to have, so they deserve to lose it," they'll shout. I'd like to see one of you go up to the CEO of Goldman Sachs and say something similar about the big banks to his face. No? I didn't think so. Just like typical bullies.

[mbo2]

12:35 PM on 05/18/2010

We are doomed as a country when we reward failure - be it it failure of the large corporation, or failure of those who bought more than they could afford.


STOP ALL BAILOUTS NOW.

[catriley]

11:32 AM on 05/20/2010

Please retire that meme of people who bought more than they can afford. Yes, there were definitely some people that jacked up their applications to buy a house they couldn't afford. The majority of losses, however, are people who were smacked down in the recession and had purchased a home they could afford at the time. Another aspect of the foreclosures are people who thought they were home flippers, or people dumping rental homes, and of course builders who dumped new homes. We're going through a short sale now because my husband's company was sold, and he was only able to find work at a fraction of what he made. Did we buy more than we could afford? Nope.

The banks share a huge part of the blame here. While I understand that they're talking massive losses, their ineptitude, bad attitudes, and refusal to hire enough staff, is also fueling the failure to refinance these people.

[mbo2]

12:32 PM on 05/18/2010

Greece, here we come.

[racingdrew]

10:42 AM on 05/18/2010

If you haven’t read my prior post called “ While the Government is working towards a Federal program for Principal Reduction…The private sector already has the solution ” please do so, because it explains a lot about the solution to this problem today, information about what is happening today, results people are getting and how to qualify. http://www.realestatesecretstoday.com/acs_principal_reduction.html

[NHGranite]

10:14 AM on 05/18/2010

I know! Let them eat cake. In debtors prison. after we get their house. oops, meant to say, let's help them, even if we misled them, even if they didn't understand 35% credit card interest, even if they thought their house could pay off those credit cards. Screw, a building is way more important than a person. Exception: if that "person" is in fact a "corporation" according to the SCOTUS, then they get to go scot free.