subject: Modification rejections spike up as a correction works through – ForeclosureConnections [print this page] Modification rejections spike up as a correction works through ForeclosureConnections
he ratio of modifications to rejections to jumps the wrong way
No worries, says Chief of Treasury's Homeownership Improvement Office
It's just a spike, her colleague says
Information just released provides a hard-hitting summary of HAMP's success (or failure, if you prefer) in recent months over twice the number of American households tripped over Obama's hoops as made it through the maze to permanent relief. That's around 120,000 devastated hopes compared to 60,000 homes saved for now at least.
On the upside it seems that things are finally happening. But, we shall never know the tragedies that lie behind these numbers.
This is the first month that rejections have exceeded approvals since these results have been reported on in fact cancelled modifications jumped 82% month-on-month this April.
As might be expected, the Treasury maintained an upbeat stance. Chief of Treasury's Homeownership Improvement Office Phyllis Caldwell recently told reporters that " it's important to remember that our focus has been on getting homeowners in trial modifications through the decision. As those decisions get made, it's certainly expected that there would be some that would fall out of HAMP and be considered for other foreclosure alternatives."
"The number is a very, very small percentage of the total amount of permanent modifications, she added.
Over 290,000 American households are currently benefiting from 5 year modification programs. These are often described as permanent because the rate of interest (which is at a historic low) is considered unlikely to grow much during the period of the loan.
So why did April cancellations exceed the sum of new permanent and trial modifications combined? And by 27%, compared to the Treasury Department's own report?
"I think it's great to take these numbers in context with the broad efforts to stabilize the housing market," says David Stevens, Chief of the Federal Housing Administration. David points out further that both home prices and the number of new foreclosures have begun to stabilize, and credits the government's efforts in holding down interest rates and helping American households refinance their mortgages with lower rates and lower payments.
"We don't claim that the housing market is totally out of the woods, but it's certainly showing signs of stabilizing," adds Herbert M. Allison Jr, Treasury's Assistant Secretary for Financial Stability.
According to Allison, the cancellation side of the equation is up, in part at least, on account of an earlier version of the mortgage modification program that allowed trial applicants to merely state income, as opposed to proving it. He predicts that the proportion of approved permanent modifications will correct itself once these are through the system, and should be closer to 100% successful once the application criteria are correctly applied.
