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This article should come as no shock.  The HAMP plan has a mediocre success rate as it lets the loan servicers evaluate homeowners in financial distress rather than the bankruptcy courts.  There is NO ENFORCEMENT of the HAMP guidelines of any substance and the program has no principal reduction aspect. 

HAMP litigation in bankruptcy court is gaining traction and compelling loan seervicers to provided special attention to Plaintiff's in pursuit of a loan mod or face attorney fees.

Unfortunately most folks can't afford litiigation costs and attorney fees. The failure of HAMP should result in an increase in foreclosures and short sales in the next year.  It may be time to consider a short sale exit strategy for those who have fallen out of the program.

WASHINGTON -- By MARTIN CRUTSINGER

Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

A new report issued Friday by the Treasury Department said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July. That's about 48 percent of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.

The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market, analysts say.

Another 421,804, or 32.3 percent of those who started the program, have received permanent loan modifications and are making their payments on time.

Many borrowers have complained that program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

The banking industry said borrowers weren't sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers' monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.

The Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period.

According to the United States Government Accountability Office ("GOA"), the 133 loan servicers who have contracted with the government to perform loan modifications under the guidelines and "mandatory" directives of the Home Affordable Mortgage Program [HAMP], have already received $36.9BILLION of the $50BILLION in TARP funds set aside for the program. Contemplate the irony...taxpayers have paid loan servicers $36.9BILLION to date to disregard HAMP guidelines and, more often than not, screw over homeowners if financial distress.

This is nothing that we and borrowers don't already know...but see for yourself:

http://www.gao.gov/new.items/d10556t.pdf

Highlights:

When Treasury announced the program in March 2009, it estimated that HAMP could help 3 to 4 million borrowers. Through February 2010, including both the portion funded by TARP and the portion funded by Fannie Mae and Freddie Mac:

                        about 1.1 million borrowers had begun trial modifications; of which

                        about 800,000 were in active trial modifications, and

                        fewer than 200,000 permanent modifications had been made.

As of early March 2010, the TARP-funded portion of the program had 113 participating servicers, and about $36.9 billion of the $50 billion in TARP funds for HAMP had been allocated to these servicers. A typical TARP-funded modification could result in a monthly mortgage payment reduction of about $520.

Treasury has taken some steps, but has not fully addressed concerns that GAO raised in its July 2009 report on HAMP's transparency and accountability. For example, Treasury has yet to finalize some key components of its internal controls over the first-lien program, including establishing metrics and benchmarks for servicers' performance. In addition, Treasury has not finalized remedial actions, or penalties, for servicers not in compliance with HAMP guidelines. According to Treasury, these remedies will be completed in April 2010. Lastly, GAO reported that Treasury's projection that 3 to 4 million borrowers could be helped by HAMP was based on several uncertain assumptions and might be overly optimistic, and GAO recommended that Treasury update this estimate, but the Department has not yet done so.

Preliminary results of GAO's ongoing work show inconsistencies in some aspects of program implementation. Although one of HAMP's goals was to ensure that mortgage modifications were standardized, Treasury has not issued specific guidelines for all program areas, allowing inconsistencies in how servicers treat borrowers. For example, the 10 servicers GAO contacted had 7 different sets of criteria for determining whether borrowers who were not yet 60 days delinquent qualified for HAMP. Also, some servicers were not systematically tracking all HAMP complaints and, in some cases, tracked only resolutions to certain types of complaints, such as written complaints addressed to the company president. GAO also found that servicers faced challenges implementing HAMP because of the number of changes to the program, some of which have required servicers to readjust their business practices, update their systems, and retrain staff.

The report reflects the reality on the front lines.  Servicers have no incentive to help homeowners in financial distress.  There is no penalty for lack of compliance with HAMP guidelines.  The Treasury Department is doing nothing to act as a watchdog, yet continues to write checks to the servicers.

I renew my call for a private cause of action.  Homeowners need access to the Courts to hold loan servicers accountable.  Leaving HAMP guideline enforcement up to Fannie Mae has failed.  The crisis has worsened and its cost taxpayers $37Billion to date.

After earning unprecedented wealth in creating the foreclosure crisis, how is it that taxpayers must now pay lending industry players BILLIONS for their failed efforts to implement HAMP and mitigate the crisis that they created?

In what other industry can you create a crisis and be so well paid to do such a terrible job attempting to fix the crisis?

Its an extreme case of the fox watching the chickens...in this case, we are talking about a very well paid fox.

The Administration announced adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs after admitting that "Servicers were slow to implement HAMP, resulting in a slow start for the program."

The program modifications will expand flexibility for mortgage servicers and originators to assist more unemployed homeowners and to help more people who owe more on their mortgage than their home is worth because their local markets saw large declines in home values. 

The FHA refinance options being announced today may provide more opportunities for lenders to restructure loans for some families who owe more than their home is worth.  This is a voluntary program for lenders and homeowners.  The population eligible for a FHA refinance must be current on their mortgage. 

No specific details or underwriting guidelines are available, nor has a timeline for implementation been announced.  See below:

http://www.treasury.gov/press/releases/tg614.htm

March 26, 2010
TG-614

Housing Program Enhancements Offer Additional Options for Struggling Homeowners

Refinements to Existing Administration Programs Designed to Help Unemployed, Underwater Borrowers While Helping Administration Meet its Goals

WASHINGTON - Today, as part of its ongoing commitment to continuously improve housing relief efforts, the Administration announced adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs.  These program adjustments will better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.  The program modifications will expand flexibility for mortgage servicers and originators to assist more unemployed homeowners and to help more people who owe more on their mortgage than their home is worth because their local markets saw large declines in home values.  These changes will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012. Costs will be shared between the private sector and the Federal Government; the Federal cost of these changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP). 

Housing Policy Overview

The Administration's goal is to promote stability for both the housing market and homeowners. To meet these objectives, the Administration has developed a comprehensive approach using state and local housing agency initiatives, tax credits for homebuyers, neighborhood stabilization and community development programs, mortgage modifications and refinancing, and support for Fannie Mae and Freddie Mac.  The Administration's efforts for homeowners have focused on giving responsible households an opportunity to remain in their homes when possible while they get back up on their feet, or to relocate to a more sustainable living situation. Today, mortgage rates are at record lows and, thanks in large part to these programs, more than four million homeowners have refinanced their mortgages to more affordable levels helping to save more than $7 billion annually, more than one million are saving an average of over $500 per month through the Administration's modification program, home equity increased by more than $12,000 for the average homeowner in the last three quarters last year and the economy is growing.

Even with this success, we continue to see challenges.  Servicers were slow to implement HAMP, resulting in a slow start for the program.  Recent improvements in the program have accelerated the pace of modifications, and the adjustments announced today will improve performance.  But our strategy to address the crisis must evolve because our challenges have also evolved.

Our housing initiatives must balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone. The President has said: "We can't stop every foreclosure." And in fact, we can't maintain the balance described above if we assist every borrower.  For example, investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes. Some people simply will not be able to afford to stay in their homes because they bought more than they could afford.  Instead, the Administration must focus on providing responsible homeowners opportunities to obtain a modification or to refinance and prevent avoidable foreclosures and, when necessary, must facilitate the transition to a more sustainable housing situation. The adjustments announced today are tailored to accomplish these goals by helping a targeted group of borrowers.

Eligible homeowners for modifications under HAMP must, for example: live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship.  The new flexibilities for the modification initiative announced today continue to target this group of homeowners.

The FHA refinance options being announced today will provide more opportunities for lenders to restructure loans for some families who owe more than their home is worth.  This is a voluntary program for lenders and homeowners.  The population eligible for a FHA refinance must be current on their mortgage.  This rewards responsible homeowners and creates stabilizing incentives in the housing market.

Taken together, the Administration's broad housing initiatives and the new flexibilities announced today will offer a second chance to millions of responsible, middle-class American families struggling to stay in their homes and will help to stabilize our households, neighborhoods and communities. 

Background on Housing Program Initiatives to Date

The Administration has taken a broad set of actions to stabilize the housing market and help American homeowners.  These efforts are having an impact on our housing markets - we are seeing signs of stabilization.  Looking back to over a year ago - stress in the financial system had severely reduced the supply of mortgage credit, limiting the ability of Americans to buy homes or refinance mortgages.  Millions of responsible families who had made their monthly payments had fulfilled their obligations saw their property values fall, and found themselves unable to refinance at lower mortgage rates.

In February 2009, less than one month after taking office, President Obama announced the Homeowner Affordability and Stability Plan.  As part of this plan and through other housing initiatives, the Administration has taken the following actions to strengthen the housing market:

Actions Supporting Market Stability and Access to Affordable Mortgage Credit

·         Provided strong support to Fannie Mae and Freddie Mac to ensure continued access to affordable mortgage credit across the market; 

·         Together, Treasury and the Federal Reserve have purchased more than $1.4 trillion in agency mortgage backed securities, which have helped keep mortgage rates at historic lows, allowing homeowners to access credit to purchase new homes and refinance into more affordable monthly payments;  and

·         The FHA has played an important counter-cyclical role, providing liquidity for housing purchases at a time when private lending has declined.

Actions Helping Homeowners Purchase Homes, Refinance and Modify Mortgages to More Affordable Payments, Prevent Foreclosures and Stabilize Communities

·         Launched a modification initiative to help homeowners reduce mortgage payments to affordable levels and to prevent avoidable foreclosures;

·         Supported expanding the limits for loans guaranteed by Fannie Mae, Freddie Mac, and FHA from previous limits up to $625,500 per loan to $729,750;

·         Expanded refinancing flexibilities for the Fannie Mae and Freddie Mac loans, particularly for borrowers with negative equity, to allow more Americans to refinance;

·         Launched a $23.5 billion Housing Finance Agencies Initiative which is helping more than 90 state and local housing finance agencies across 49 states provide sustainable homeownership and rental resources for American families;

·         Supported the First Time Homebuyer Tax Credit, which has helped hundreds of thousands of responsible Americans purchase homes. 

·         Through the Recovery Act is providing over $5 billion in support for affordable rental housing through low income housing tax credit programs and $2 billion in support for the Neighborhood Stabilization Program to restore neighborhoods hardest hit by concentrated foreclosures; and  

·         On February 19, 2010, the Administration announced the $1.5 billion HFA Hardest Hit Fund for housing finance agencies in the nation's hardest hit housing markets to design innovative, locally targeted foreclosure prevention programs.

Historically low mortgage rates along with expanded refinancing flexibilities for Fannie Mae and Freddie Mac loans have helped more than four million American homeowners with Fannie Mae and Freddie Mac loans to refinance, saving an estimated $150 per month on average and more than $7 billion in total.    HAMP has provided more than 1 million struggling homeowners a second chance to stay in their homes - with each homeowner in a modification saving more than $500 per month on average. 

Together, these initiatives are having an impact - strengthening the housing market, helping responsible homeowners prevent avoidable foreclosures and rebuilding communities and neighborhoods.  Today mortgage rates remain at historic lows - the primary interest rate is now about 5 percent, lower than at any time in the three decades before the crisis.  We are also seeing encouraging signs in housing indicators - home prices and the pace of home sales have stabilized in recent months.

Source:  http://financialstability.gov/docs/report.pdf

Go this link and find specific loan mod performance results on your loan servicer.

The charts on page 5 of the the HAMP Modification Activity by Servicer shows the relative performance of the top 20 loan servicers that have signed up for the HAMP loan modification program. 

Companies typically do not own the loans that they service.  The loans are owned by mortgaged backed security trusts referred to as "private investors".  As such, loan servicers typically have no "skin in the game".  As a result, those companies who service loans for private investors are the worst performers within the HAMP plan. 

There is a direct relationship between the performance and the number of loans that the servicer actually owns.  Citibank has a relatively large number of loans within their portfolio as opposed to loans owned by a private investor or mortgage backed security trust. 

Citibank, Saxon and GMAC has been the most successful modifier of loans on a percentage basis.  Each of these servicers have active modifications on at least 44% of their eligible loans, defined as those loans that are at least 60 days delinquent.  The worst performers include One West Bank (21%), Ocwen (20%), Bank of America (19%), Litton (16%), American Home Servicing (9%), HomeEq (4%) and Wells Fargo owned Wachovia (3%).

Bank of America has the largest number of loans at 203,470, yet only 9,367 are actually owned by Bank of America.  JP Morgan Chase is next with 153,967 eligible loans, of which only 21,871 are actually owned by the bank.  Wells is third with 118,708 eligible loans, of which only 5,041 are owned by the bank.  Most of the loans serviced by the big servicers tend to be owned by private investors. If the loans default, these banks don't suffer the same losses.  Compare these proportions to CitiBank.  Citibank services 112,998 loans and owns 31,648 of these loans.  Because Citibank owns a substantial number of the loans, they have tended to modify more of the loans so as to minimize their potential losses. 

The article below takes a year end snapshot of the foreclosure situation.  However, the California numbers deserve a deeper look.  Typically, properties move through the minimum 111 day non-judicial foreclosure process at a steady rate.  Moratoriums, loan mod programs and lender manipulation have created a clogging of the pipeline at the tail end.  Consider this:  Since September 1, 2009, 106.616 Notices of Default have been filed on title and are still pending as of today.  Assuming the loan is not reinstated, the Notice of Default stage lasts at least 90 days before a sale can be set.   While generally referred to as "pre-foreclosure", this is not accurate.  The Notice of Default or NOD formally starts the non-judicial foreclosure process.  True "pre-foreclosure" properties consist of tens of thousands of other loans that are in default, yet the lenders have delayed filing the Notice of Default for their own reasons. 

The log jam is occurring when it comes to the auction dates. Sales can happen on only 21 day notice.  But these days, Lenders are repeatedly setting sale dates, waiting to the last minute and then postponing the sales.  For example, there currently 35,198 pending sale dates in the next month that were originally filed in the first 6 months of 2009.  Another 41,216 of the upcoming sales were initiated in third quarter 2009.  Another 39,478 of sales have been initiated since the beginning of the fourth quarter of 2009.  All told, 116,492 properties, hundreds of thousands of Californians, have a foreclosure sale scheduled on their home tonight.   Another 106.616 properties are in the NOD pipeline.  Historically, NODs outnumber sale date properties [NTS] by an eight to one margin.  Still, hundreds of thousands of additional loans are in default and will soon follow into foreclosure unless a substantive political solution is crafted. 

Imagine what this is going to do to home prices when these properties flood the market.  Prices will be pushed down further as long term interest rates increase as Fannie Mae stops buying mortgage backed securities.

Source:  Foreclosureradar.com.

RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Year-End 2009 Foreclosure Market Report™, which shows a total of 3,957,643 foreclosure filings -- default notices, scheduled foreclosure auctions and bank repossessions -- were reported on 2,824,674 U.S. properties in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007. The report also shows that 2.21 percent of all U.S. housing units (one in 45) received at least one foreclosure filing during the year, up from 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006.

Foreclosure filings were reported on 349,519 U.S. properties in December, a 14 percent jump from the previous month and a 15 percent increase from December 2008 -- when a similar monthly jump in foreclosure activity occurred. Despite the increase in December, foreclosure activity in the fourth quarter decreased 7 percent from the third quarter, although it was still up 18 percent from the fourth quarter of 2008.

"As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said James J. Saccacio, chief executive officer of RealtyTrac. "After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline.

"Despite all the delays, foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December," Saccacio continued. "In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog."

A total of 632,573 California properties received a foreclosure filing in 2009, the nation's largest state foreclosure activity total and an increase of nearly 21 percent from 2008. After four straight month-over-month declines, California foreclosure activity in December increased nearly 9 percent from the previous month, but the state's fourth quarter foreclosure activity was still down 17 percent from the previous quarter.

Source:  http://www.realtytrac.com/contentmanagement/pressrelease.aspx?channelid=9&accnt=0&itemid=8333