Half of the so far nearly 500,000 permanent modifications completed by servicers participating in the Home Affordable Modification Program will redefault, Sen. Ted Kaufman (D-Del.), chairman of the Congressional Oversight Panel said Wednesday.
Since the HAMP launched in March 2009, servicers have completed 495,898 permanent modifications, and extended 1.6 million trials. So far, the Treasury has committed nearly $30 billion to the servicers for a program that was initially estimated to cost $50 billion.
Servicers are paid $1,000 for every permanent modifications and another $1,000 every year the new loan is current.
“To date fewer than half a million homeowners have received permanent mortgage modifications through Treasury’s program, and as many as half of these borrowers will ultimately redefault and lose their homes,” Kaufman said, a view in line with the Special Inspector for the Troubled Asset Relief Program that said earlier in the week that TARP has let down many homeowners.
Of all mortgages that had been converted into a permanent modification, 15.6% fell into 60-plus day delinquency within nine months of the conversion, and 11% fell into 90-plus day delinquency. After six months of the conversion, 9.8% had gone into 60-plus day delinquency, and 5.5% into 90-plus, according to the latest HAMP report.