Report: 26% of HAMP Borrowers Re-Defaulted, Rate Continues to Worsen

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Does this come as a surprise to anybody? This is a 200 Billion Dollar loss to taxpayers and going up rapidly. Please read the article below and let me know what you think.

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Upon closer examination, the Home Affordable Modification Program (HAMP) has not helped as many borrowers as it may seem, according to a report from the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

HAMP, a government loan modification program created to prevent foreclosures, has provided about 1.2 million modifications to distressed borrowers since its inception in 2009. Of those borrowers, 306,538 fell behind on their payments by three months, which means in actuality, 865,100 are still actively in the program, the taxpayer watchdog agency revealed. Borrowers who miss three consecutive payments become disqualified from the program.

Of the re-defaulters, 22 percent have entered into the foreclosure process.

SIGTARP also found the percentage of modified homeowners who end up as re-defaulters has steadily increased over time. At the end of 2009, the share stood at 1 percent and has since risen to 26 percent as of April 2013.

The likelihood of falling out of the program also seems to increase over time.

For example, among oldest HAMP modifications, the re-default rate was 46 percent. For loans modified in 2010, the re-default rate averaged 38 percent.

On the other hand, homeowners who received modifications in early 2013 have a re-default rate of less than 1 percent.

The report also found states with a smaller numbers of-HAMP borrowers tended to have higher re-default rates. Mississippi, which has provided just over 4,500 HAMP modifications, has a re-default rate of 35 percent, the highest out of any other state. Alabama was close behind with a default rate of 33 percent, followed by Tennessee, Delaware, Louisiana, and Missouri, where the rate was 32 percent for each state.

Based on region, Western states averaged the lowest default rate of 21 percent and had the highest number of permanent modifications as group.

To read the complete article – please use the link below.

Above-Normal Price Growth

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