How Treasury spins its mortgage-modification figures

By Felix Salmon
August 4, 2009
released its first report on the success to date of the Making Home Affordable program:

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Treasury has released its first report on the success to date of the Making Home Affordable program:

The purpose of the report is to document the number of struggling homeowners already helped under the program, provide information on servicer performance and expand transparency around the initiative.

The problem is that the report seems to have more spin than transparency. Consider this graph:


Yay! It’s up and to the right! Things must be great, no? Except there’s that annoying word “cumulative”. Cumulative graphs are generally misleading: they can only ever go up, and can’t ever go down. In order to judge this graph, you really have to look very closely at the gradient, to see whether the rate of modification trials is increasing at all. And it seems that it isn’t.

What’s more, you’ll look in vain, in this report, for any indication of how the rate of new modifications compares to the rate of new foreclosures. That’s the key thing to look at: if the rate of foreclosures starts to fall, we might be getting somewhere. But that rate isn’t mentioned in the report.

Yes, the report does single out some servicers, such as Wachovia Mortgage, for their very low modification rates. But overall it seems to be determined to paint a rosy picture of the HMA scheme, rather than objectively reporting on whether it’s working or not.


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Servicers are starting to come out and say why HAMP is failing (and will continue to fail). Matt Padilla at the OC Register has the story ( 9/08/04/loan-servicer-says-foreclosure-r escue-plan-is-costly/14901/).

In a nutshell, the servicers have to keep paying out to the investors during the 4 month trial/grace period required by the admin. In exchange, they get $1,000. If they foreclose they continue to get their fees and the losses are eaten by the investors.

My question is, how could the experts in the administration have gotten all this so wrong, and how are they going to “fix” it?

Posted by Kelli K | Report as abusive

The great subprime crisis left all of us in a bay of fire. However it seems that things are getting better. Home Affordable Modification Plan actually seems a ray of hope, but really can’t say how effective its application would be. To qualify for it, in itself is little bit difficult. I felt that this plan suggest minimum standards and not a maximum.

Another exciting plan could be Eco towns. Well these townships provide a healthy living style and curb the cost of carbon emission as well. So investing in Eco towns would help saving cost on carbon emission, healthcare cost and also the HAMP.

This is awesome!!!