Loss of income leading cause of mortgage modifications
Many of the homeowners who have been struggling under the threat of foreclosure and have pursued mortgage modifications under the Home Affordable Modification Program did so because of a loss of income, a new report finds.
In its recent Servicer Performance Report, the U.S. Treasury says 60.2 percent of all loan modifications conducted by HAMP through December were due to income changes. In addition, 11.2 percent were performed because of excessive payment obligation, while 2.8 percent applied for the program due to a borrower’s illness.
The study also found that 30,000 homeowners have undergone permanent loan modifications each month for the last six months. By comparison new trial modifications averaged 27,000 per month.
The study also found that the modifications were performing well over time. At 12 months from their inception date, nearly 85 percent of homeowners were still in a permanent modification, and less than 16 percent had gone on to miss three consecutive mortgage payments.
Despite the strong performance, many government groups have expressed their unhappiness with the program. HAMP was started with the goal of achieving 3 million to 4 million modifications, but to date, the program has only managed to start nearly 550,000 modifications.