Posted on Calculated Risk:
From MarketWatch: Obama plan claims 500,000 mortgage modifications started
U.S. loan servicers have begun modifying more than 487,081 loans for troubled homeowners on the verge of foreclosure as of the end Sept. 30, according to the report. The program met its 500,000 goal in early October. More than 757,955 modification offers have been extended by loan servicers as part of the program known as the Home Affordable Modification Program, or HAMP.And from Scott Reckard at LA Land (LA Times):
Stand by ... for answers to the big question: whether these modified loans will hold up or whether “underwater” homeowners will stumble back into default after hitting new bumps along their financial roads.As I noted back in July when this goal was announced:
The trial modifications “are simply offers,” [Mark Zandi of Moody's Economy.com notes]. “Many won't turn into actual mods, and those mods that occur will have a high redefault rate.”
Counting the number of mods might make for useful PR, but some mods are more effective than others. A capitalization of missed payments and fees, along with a rate reduction and/or extended term, are the most common modifications. But for homeowners with significant negative equity that is just "extend and pretend" and leads to a high redefault rate and just postpones foreclosure.The September industry data is not available yet on the HopeNow website.