HAMP: Mortgage Modifications Dwindle Further As Administration Tut-Tuts Banks [UPDATE]

WASHINGTON -- The Obama administration announced more disappointing numbers for its signature anti-foreclosure initiative and said Thursday that it would continue to withhold payments from two banks running the program.

Just 14,000 homeowners received trial modifications under the Home Affordable Modification Program in July, the fewest of any month since shortly after the program's launch early in 2009. The previous low came in June. (The Treasury Department, which oversees HAMP, said 22,079 modifications in total have been reported since the June numbers came out, but some of those modifications happened in previous months.)

The administration also released its second quarterly review of homeowner treatment by banks and companies and that service mortgages, finding that Bank of America and JPMorgan Chase have continued to do such a bad job that incentive payments for completed modifications would be withheld.

"While tens of thousands of additional homeowners benefit from the administration's programs each month, we need to keep the pressure on servicers to effectively assist those homeowners who are still struggling and eligible for assistance," said Treasury official Tim Massad in a statement. "These assessments provide an unprecedented level of information about servicer performance and are designed to help more eligible homeowners walk away from this process with better results."

HuffPost readers: Trying to get a mortgage modification or a refinance under the Home Affordable Refinance Program? Tell us about it -- email [e-mail]. Please include your phone number if you're willing to do an interview.

HAMP lowers eligible borrowers' monthly payments to 31 percent of their income by reducing interest rates, extending the terms of the loan, and temporarily forbearing principal payments. Qualified borrowers who make three monthly payments are supposed to be put into permanent modifications, and servicers get $1,000 incentive payments. Homeowners don't need to be behind on payments to qualify, though they must at least be at risk.

As of July, 675,447 homeowners were in permanent modifications, while nearly 900,000 trial and permanent mods had been canceled. President Obama said when HAMP launched that it would modify mortgages for 3 to 4 million homeowners, but that goal now seems unreachable. Instead, the Treasury Department has focused on improvement throughout the entire mortgage servicing industry, noting Thursday that "[m]ore than 5 million mortgage aid arrangements were started between April 2009 and the end of July 2011."

Alan White, a HAMP expert and law professor at Valparaiso University in Indiana, pointed out that mortgage servicers prefer to do non-HAMP modifications by a rate of five to three, even though borrowers in HAMP modifications are about half as likely to fall behind on payments.

"This is a crazy situation, where ideology and servicer culture seems to prevail over economic logic," White said. "As with the economic stimulus, it is true that things would be worse without HAMP. Nevertheless, to get a grip on the home price slide and the housing depression, we need to simplify this program and enforce the program contracts."

In June, the administration announced that it would withhold incentive payments from Bank of America, Chase and Wells Fargo. On Thursday, Treasury announced that Wells had been let out of the dog house -- but Bank of America and Chase had not.

Chase and BofA both received particularly low marks for miscalculating borrowers' income. Treasury is withholding $18 million from Bank of America and $28 million from Chase. Together the two banks posted $9.1 billion in net income in the second quarter of 2011.

"We continue to make significant improvements to our processes and controls," said a Chase spokesman. "We expect future scorecards will reflect that."

"We are working to improve the ratings that would allow reinstatement of incentives, but we are not driven by that goal," said a Bank of America spokesman. "We lead the industry with completed HAMP modifications and Bank of America is driving one in four modifications completed in the program so far this year. More than 910,000 Bank of America customers have received mortgage modifications through all of our programs to date, and our team will continue working very hard to prevent foreclosure for our customers who are experiencing hardships as a result of unemployment, underemployment and other continued economic conditions in our country."

Once their mortgage servicing practices improve, Treasury will let the banks have their money back.

This story has been updated to include comment from Bank of America.

Comments

[Annie Gldzhyan]

01:35 PM on 09/07/2011

so many people relied on the HAMP program for some relief but yet all that's coming from it is more problems... the Obama administration should've focused more on jobs than relying on this program. Loop 21 has 3 of the biggest problems w/ the program: http://loop21.com/content/why-obamas-foreclosure-program-failing

[Andy Nicols]

08:57 PM on 09/05/2011

Why refinance and pay fees which will add to your loan balance, when you can get a loan modification for free? With a loan modification there are no closing costs, you can lower your rate to 2%, you don't need any equity in your home, you could get a principal reduction, your credit score has nothing to do with qualifying for a loan modification, bankruptcy does not matter, foreclosure does not matter, and you can apply yourself and structure the loan modification to give you the lowest possible payment.

Learn how to apply for a loan modification and structure it to give you the best deal: There is a book called "Loan Modification Secrets" that you can get if you go to Google eBooks or it is also at Amazon which will show you how you can apply and structure your loan modification. good luck!

http://books.google.com/ebooks?id=sM_ogZNFxM0C&dq=loan%20modification%20secrets&as_brr=5&source=webstore_bookcard

[Reticent2]

12:43 PM on 09/04/2011

Tut tut and a hand under the table shoving cash their way.

[Lindytindy]

10:56 AM on 09/04/2011

That's Obama always looking out for us. Dump Obama in 2012!

[Mr Hankey]

08:55 PM on 09/04/2011

Do you think that a Republican president would have done better with this housing crisis?
Ha ha ha, I don't.
Did O do everything he could have done? Probably not, and I wish HAMP would have been a mandated option for any homeowner who wants to save their home.

[srooge]

12:46 AM on 09/04/2011

BANKTERRORISTSWATEDDEADORALIVEFORONEDOLLAR

[srooge]

11:10 PM on 09/03/2011

WHAT'S WRONG? THE FORCLOSURE PRGM WORKING GREAT, IT'S KICKED MILLION OF AMERICANS OUT OF THEIR HOME. THE HOUSES ARE DESTROYED AND NEW BUILDINGS CREATED. IT'S WIN WIN BABE!

[AZreb]

09:26 AM on 09/03/2011

Here is a little tidbit that you might find interesting - an acquaintance lost a lot due to failure to pay. The property went up for auction - she bought it back for pennies on the dollar. BUT taxes are coming due, and even with the devaluation of the property she will more than likely not be able to pay the taxes. So it will go back to the auction block again.

This could be a real problem for the buyer - even a lower and lower price over auction after auction will cut into any money she may have and at the end she will not only have lost the property, but also all her money.

Betting on something like this in these bad economic times is a sucker's bet - especially when you have nothing to fall back on in the way of savings or paychecks. Don't bet more than you can afford to lose.

[Reno Fickler]

09:27 PM on 09/02/2011

I still think the Corps and the banksters will pounce when the govt puts all its' 'toxic' assets on the market. This is gong to be one of the "dime-on-a-dollar" deals. Our biggest concern should be the consolidation of the wealth. Those numbers continue to dwindle.
The stock markets are more and more controlled by people moving huge sums of money. When those same people control the mortgage industry......because remember, they have the money and soon the name of the game will be "The Price Is Right".

[Davidc Smith]

02:20 PM on 09/02/2011

The fix is easy. Undue the Bush Bankruptycy "reforms" and let people bankrupt the debt. As matters stand, the Bankster Bean Counters continue to list these things as assetts when in fact they are worthless. If people could have Bankrupted them, then they would have been flushed out of the system, and the problem would have dissapated long ago. As matters stand all we have done is to continue to wallow in the dung for years while the banksters continue to try to get blood out of turnups--dudes the turnups died years ago, and in the end all
they will get from these bad debts is more paper to list as none existent assets. Interesting how the "reforms" preceded the crisis.

[ta8ersalid]

04:56 PM on 09/02/2011

Interestin­g how the "Bankruptcy reforms" preceded the crisis.

they knew this was coming and prepared for it.

[Cypher6]

12:34 AM on 09/03/2011

Interestingly, I was having a conversation about exactly this topic with a friend that works in the housing/mortgage industry. He stated the banks don't really care about "getting the assets of their books" by helping through loan modifications or any other means, since in fact they have already made their money on them from the insurance (remember AIG?). They are in no hurry to get rid of them, they are just trying to maximize profits.

[grrchrds]

01:18 PM on 09/02/2011

You want to fix it President Odowngrade? LEAVE IT ALONE!

[LightShadow62]

10:07 AM on 09/02/2011

The banks serve as the gateway to the HAMP system. I know first hand that they discourage and even try to scare people away from HAMP.

[Countess]

09:00 AM on 09/02/2011

This administration's failure to have a serious program to even come close to fixing the mortgage crisis has been the biggest single hinderance to economic recovery and it is obviously due to the fact that the big banks give the president huge sums of money for his re-election. Robert REich and others have proposed serious ideas that would make the situation much better but would offend the bankster so they have been ruled out.

[truthfinderddw]

07:21 AM on 09/02/2011

The Regulatory arm of Fanny and Freddie are filling suit soon against some of the Banks. Britian is getting pressure from their Finance Industry to hold off from Regulatory reforms. Good Regulation, Enforcement, and oh, yes Government Oversight is Paramount. Yes, their will be those that will instruct, that Govenment should not be envolved and Oversight left to the Industry, and I do understand some of that point, understanding that many in Government and their parasitic relationships with Industry Leaders are part of the Problem. More Government is not needed, although Fundemental Structural changes are absolutely due in are Political and Governmental Body's. Responsive and Representative Government can serve its Constitutional duty to the People, it has not, and we must bore some of that responsiblity by not holding Government and Industry to Account. We must demand Representation and Accountablity and then remove that which is no Longer working.

[sanddc]

06:40 AM on 09/02/2011

Since President O. is to be blame for every problems that been in existence under every other President ,why not blame him for the crucifying of Christ. I think he has room on the list of blame for it.

[Independent4America]

02:56 AM on 09/02/2011

Crooked banks. Crooked government. The people facing foreclosure did not plan correctly and bought over their heads. Now they are the ones getting help? No wonder housing continues to sink. The people qualified to buy homes have lost their equity and can see that the market is still going the wrong way so why move or sell. SO much wrong with this program from who they are trying to help, to who they are letting run it, no wonder the whole thing is a farce. If the government wants to throw our money around why not use it for incentives to people with jobs, who know how to buy within their price range and who can qualify for a standard 30 year mortgage? They don't because we have a government filled with !d10ts and crooks who devised yet another backdoor pipeline to funnel more money to the crooked banks.

[ta8ersalid]

05:00 PM on 09/02/2011

Mostly correct, but I believ there are alot of people that qualified under normal banking guidelines, were making enough money to make the payments.

Then, gas prices skyrocketed, followed by food prices, followed by everything else we need to live. Then, Bernake keeps printing money, making the dollar go down in value and raising costs even more.

[just4U113]

04:11 PM on 09/16/2011

I totally agree with U. The only ones making all the money in this farce is the banks and the realtors. I was lied to by the realtors and the banks and have no equity after putting down over $100,000 on my house & owning ( ha ha ) it only 3 years.
Where is my equity ? It's in the realtors and banks pocketbooks. Certainly not mine.
And where does all the help go to ? It's going to all the people who don't pay their bills, whatever they may be, & for whatever reason.