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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