Over the life of the government’s Home Affordable
Modification Program (HAMP), 1.25 million homeowners have received
permanent HAMP modifications, and so far 27 percent of those have later
re-defaulted on their loans, according to a quarterly report to Congress from the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
In its report released to lawmakers last
week, SIGTARP berated Treasury for not heeding the office’s previous
recommendations regarding HAMP, stressing that the inspector general
expressed concern in April that “the number of homeowners who have
re-defaulted on HAMP permanent mortgage modifications is increasing at
an alarming rate.”
About 184,000 homeowners (29 percent) who
received HAMP modifications through TARP rather than through the GSEs
have re-defaulted, costing taxpayers $972 million in incentives paid to
servicers and investors for those workouts, according to SIGTARP. Among
borrowers participating in the GSEs’ HAMP programs, just under 154,000
(26 percent) have re-defaulted (HAMP incentives on GSE loans are paid by
the GSEs themselves). Additionally, about 10 percent of all active
permanent HAMP modifications were one or two months delinquent as of the
end of August.
“The longer a homeowner remains in HAMP, the more likely
he or she is to re-default out of the program,”SIGTARP stated. The
re-default rate among the oldest HAMP modifications is 48.3 percent,
according to SIGTARP’s report.
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