Loan-modification datapoint of the day

By Felix Salmon
October 9, 2009

Shahien Nasiripour has an interesting datapoint, when it comes to the government’s HAMP loan-modification program:

Though the number of offers extended to eligible homeowners continues to rise, the number of offers accepted actually dropped, according to an analysis of Treasury Department data. In August, about 81 percent of homeowners accepted their modification offers; last month, just 54 percent of homeowners did so.

It’s not quite as simple as that, since it does take some time to go from the offer to acceptance. Specifically, once a homeowner receives an offer, they have a minimum of 30 days — and as much as 60 days, if the servicer permits, “to complete, sign, and return both Trial Period Plans, hardship affidavit, income documentation, first payment due under the Trial Period terms and any applicable executed disclosures”. Then, when they get the modification package, they have another 14 days to complete, sign, and return it.

All the same, if you look at the rate of change of loan modifications compared to the rate of change of offers extended, something weird shows up:

mods.jpg

While the number of offers continues to grow, the number of new modifications is now falling, quite sharply. That can’t be a good sign.

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Comments
4 comments so far

It’s really hard to make coherent comment without geographical breakdown of the figures. I see the Treasury data includes major servicers by name but I’m too lazy to see if that can be mapped easily by state with any degree of confidence.IDK, the dates might be significant (seasonality, how does 09 delinquency by month and state compare with prior yrs) and I’d love to know breakdown by occupation of borrower. Teachers in CA might have feared they’d be out of a job but when school comes around they find they’re not and decide to struggle on? Who knows. Insufficient data.

Posted by SP | Report as abusive

It must be understood that an offer for a loan mod can be implemented with only a verbal of the borrowers income and information. In order for it to be considered a true loan modification the the information must be verified and they complete a 90 day trial period and now that has also just been extended 60 days.When you see these kinds of numbers always dig deep into the facts as well as what is the angle of the reporting party- can be definitely construed.

Very simply the banks are issuing trial mods to people, leaving them hanging in trial modification limbo for six plus months and then denying for reasons that are never really explained in any detail, be prepared for the next wave of forclosures when these trial mods can no longer remain in limbo. NPV sais your home is worth more in forclosuresigned z

after 2 years of being unemployed and seeking a modification from Chase bank, they called a week ago to offer the trial period. The thing is,is that now that they are accepting some unemployment situations, we no longer qualify under 9 month guaranteed continuation of unemployment benefits. Yet, they are still offering the trial period. Meaning, if we take it we WILL get a balloon payment at the end of the trial forcing us further more into debt. That is why we will not accept it. We have for the past 2 years been 3 months late on our mortgage. Making payments just before getting a notice to foreclose. This is what we will continue to do. Because at least we are in control and not being drawn in again by predatory banks. And if unemployment is not extended to carry us untill we get a job. At least we will not be further in debt because we accepted a 3-7 month trial period that will only hurt not help us.

Posted by Ann | Report as abusive
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