March 8, 2011 (Shirley Allen)
What was first perceived as a Mack truck barreling down the foreclosure highway, the government’s Home Affordable Modification Program (HAMP) has turned out to be the little train that could. Originally forecast to save between 7 and 8 million homeowners from foreclosure, later reduced to 3 to 4 million, HAMP has now surpassed 600k permanent loan modifications and is expected to end with about 1.3 million loans modified when the program expires December 31, 2012.

The Treasury Department reports that HAMP has been running fairly steady over the past six months, with roughly equal numbers of trial modifications begun and permanent modifications granted. New trial modifications have been averaging about 27,000 a month, while those graduating to permanent modifications have been running around 29,000.

That is a far cry from a year ago when as many as 150,000 borrowers a month overwhelmed the program. However in the spring of last year, the Treasury Department announced new rules which required a stronger proof of eligibility before borrowers could begin trial modifications.

The lower volume of applications allowed mortgage servicers to gradually work their way through the backlog of existing trial modifications, of which approximately 44 percent eventually moved on to permanent modifications.

According to the January performance report, there are currently about 145,000 trials underway. January itself was almost right on the previous six months average with 27,000 new trial modifications begun and roughly 28,000 permanent modifications granted.

At that rate, approximately 1.3 million permanent modifications, or about one-third of what was predicted, will be completed. However, HAMP is one of the programs on the House Republicans chopping block and it is not clear if it will survive.

Tags: HAMP, loan modification, mortgage servicers, trial modifications, permanent modifications