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HAMP Update: Still Ineffective

posted by Adam Levitin

Another HAMP data report is out.  Same old story--HAMP isn't doing very much for very many people. We're up to 398,021 permanent modifications. That's out of around 1.7 million HAMP eligible mortgages and 5.7 million mortgages that are 60+ days delinquent (the June report doesn't contain the updated eligibility waterfall, unfortunately). Drop in the bucket. The trial modification numbers are a bit better, at 1.28 million, but the number of new trials each month seems to be flattening out--just 15,153 new trials started in June.  That means new permanent modifications will also start to taper off in a few months. And there are an awful lot of failed trial modifications, as Felix Salmon (commenting on the May numbers) has noted. 

I've long been skeptical about HAMP as doing too little at too high a cost, and I think the numbers bear out that skepticism. How much evidence has to amass about the failure of HAMP to provide effective foreclosure relief before the program is canned and the policy debate is refocused on providing meaningful foreclosure relief? 

[7.21.10" Jim Fickett correctly observes that I was commenting on a old report.  Whoops!  I knew those figures looked very familiar.  I've updated link to correct report and numbers accordingly.  The newer numbers are even worse.  Interesting analysis by Barclay's Capital reported here.]


Felix is linking to a report a month old. The June data is out: http://financialstability.gov/docs/June%20MHA%20Public%20FINAL%20072010.pdf.

In June there were only 15,000 new trial mods. With only 15 thousand new, and 94 thousand cancellations, HAMP is not currently making any positive contribution -- quite the opposite.

The current HAMP report has some very misleading spin. See http://ftalphaville.ft.com/blog/2010/07/21/293876/barcap-vs-hud-on-hamp/ on how the re-default rate is being reported as much lower than it really is, and http://www.clearonmoney.com/dw/doku.php?id=public:hamp_progress on how the disposition of canceled modifications is being reported as much more positive than the reality.

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