How Treasury spins its mortgage-modification figures
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.