Thirteen percent of loans modified through the Home Affordable Modification Program in the first half of 2010 were 60 days delinquent after six months, compared with 24% of loans in alternative programs, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) said in a recent report.
The mortgages modified through the main federal relief program fell into delinquency at about half the rate as those in other plans because the government provides bigger payment reductions, according to U.S. bank regulators.
After nine months, the re-default rate was 17% under the Obama administration’s plan, compared with 32% under others offered mostly by banks. The re-default rates on modifications are encouraging, Joe Evers, deputy comptroller for large bank supervision at the comptroller of the currency’s office, said in a conference call.
Policy makers continue to review the best ways to reduce foreclosures after a five-year decline in housing prices has left about one in four homeowners with loans bigger than the value of their properties.
About 608,000 homeowners started permanent loan modifications under the administration’s program as of Jan. 31, up from 117,000 a year earlier, the Treasury Department reported last month. Borrowers on about 2 million home loans received modifications through proprietary programs by banks and loan servicers.
HAMP modifications in the fourth quarter of 2010 reduced monthly payments by an average $587, or 35.9%, compared with reductions of $351, or 22%, from other programs, according to the OCC/OTS report.
