The Administration has sent a clear signal that its primary foreclosure mitigation initiative, the Home Affordable modification program (HAMP), is not working. In a press release today, Treasury and HUD announced new efforts to convert three-month trial modifications to permanent mortgage restructuring. Of 650,000 homeowners in 3-month deals so far, 375,000 are said to be coming to the end of their trial periods by December. In October the Congressional Oversight Panel revealed that only about 1,700 permanent modifications had been completed.
Treasury promises to tell us for the first time in its December report, due around the 8th or 9th, how many trial mods each servicer should have made permanent by now, and how many have actually converted. While the tone of the release suggests that much of the problem lies with homeowners failing to provide documents on time, the evidence from counselors and mediators is that there is a massive systems failure on the part of the mortgage servicing industry. While some of the temporary mods are likely to fail, so far reports are that 80% of homeowners in the program are making their payments. It would be unconscionable for these homeowners to lose their homes on account of missing paperwork.