The latest numbers on the government-backed Home Affordable Modification Program are in, and there’s some good news in there for most of the homeowners who participated. About 77% of those who went through modification (and didn’t have a mortgage tied to Fannie Mae or Freddie Mac) in July enjoyed a nice little cut to the principal amount they owe.
When you get down to it, it’s a small number of homeowners who received a loan balance writedown of any kind, at 4,778. That’s compared to the 14,1117 who entered trial loan modifications in July and an additional 16,767 who received permanent loan modifications, reports the Treasury Department.
Unfortunately for homeowners, the amount who get a cut on their balances is going to stay low, as the Federal Housing Finance Agency has decreed it won’t let any mortgages secured or owned by Fannie or Freddie to get principal writedowns. Those two companies back about 60% of mortgages, which means only 6,189 total mortgages were eligible in July.
Reports the Chicago Tribune:
Mortgage servicers are required to consider, but not required to offer, a principal reduction for non- Fannie and Freddie loans if the loan-to-value ratio of the mortgage is greater than 115 percent. In February, Treasury announced that it would triple the financial incentives paid to investors who agree to cut the loan balances of eligible underwater borrowers.
So how much money did these homeowners end up cutting out of their totals owed? The median amount forgiven was $63,580, said the Treasury. Quite a pretty penny, indeed.
In addition to the good news for those homeowners, the government stressed the need for mortgage servicers to step it up when they’re dealing with their customers. Overall, nine mortgage servicers were called out as needing to improve their customer interactions.
Most HAMP participants see cuts in principal [Chicago Tribune]