Sense on Cents

Despite overwhelming efforts on the part of Uncle Sam, the simple fact of the matter is the program to successfully and permanently modify mortgages has not gained truly meaningful traction. Public pressure on mortgage servicers specifically and the mortgage modification program at large have generated a slight, but hardly significant, increase in permanent modifications over the last month. Let’s review the statistics provided by Uncle Sam’s Making Home Affordable Program:

Home Affordable Modification Program (HAMP) Snapshot through November 2009

HAMP Trial Plans Offered to Borrowers

Making Home Affordable Program Servicer Performance Report Through November 2009

Number of Requests for Financial Information Sent to Borrowers (Cumulative): 3,137,548

Number of Trial Period Plan Offers Extended to Borrowers (Cumulative): 1,032,837

All HAMP Trials Started Since Program Inception: 759,058

All Active Modifications (Trial and Permanent): 728,408

Number of Active Trial Modifications: 697,026

Number of Permanent Modifications: 31,382

What does that 31,382 figure under the permanent modifications represent? 4% of all active modifications and 1% of those who have been solicited. At this rate, we will be waiting a LONG time for this program to have a meaningful impact on our housing market.

Where is this leading? Mortgage cram-downs. Reps. John Conyers and Barney Frank are starting to wave the cram-down flag once again. For those unfamiliar with a mortgage cram-down, it is the practice of reducing principal on the mortgage. In the process, the homeowner will be less underwater or not underwater at all and thus choose to stay in his home. Given the fact that there is no free lunch, taxpayers pick up the tab along with investors who have purchased mortgage securities backed by these mortgages.

Expect a massive fight over the implementation of mortgage cram-downs in 2010.

Thanks to our friends at 12th Street Capital for sharing the link to the Making Home Affordable Program.

LD

Related Sense on Cents Commentary:
   What is a Mortgage Cram Down? (January 1, 2009)

This entry was posted on Friday, December 11th, 2009 at 11:38 AM and is filed under General, Mortgage Cram-Down, Mortgage Crisis, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.