Loan Modifications Double, Treasury And The Obama Administration Optimistic

Loan Modifications under the HAMP program started slowly, and continued to plod along, now they are still providing completion rates that are unsatisfactory, if you want to word it nicely. Pathetic, would probably be a better description.

However, the Obama Administration has worked hard to put pressure on the banks and servicers that manage home mortgages and have the purse strings on loan modifications. What was the result? The number of temporary loan modifications that have been made permanent doubled to 66,465 and 46,056 three month trial mortgage modifications have been approved and only await the borrowerâ€™s signature for completion, according to the Treasury Department.

These completion rates are still low, but as of November 30^th 2009 completed loan modifications stagnated at 31,382 a doubling of loan modifications is an accomplishment that deserves some attention, and why not, some much awaited positive reporting.

What is also encouraging is that areas that were hit the hardest by the drop in home prices, like California, are leading the way in the loan modification revival. California, for instance completed 13,353 permanent modifications in one month and 158,935 await approval.

That is the good news; however it is very early to get too excited. The current number of trial modifications is just under 700,000 which compared with 66,465 completed loan modifications illustrates the amount of work that is still required to make a dent in the mortgage crisis.

Just last year there were 2.8 million foreclosures, and the number of foreclosures in December rose by 14% which shows how the modest progress we are reporting is really a proverbial drop in the ocean.

The administration understand too well the complaints the public are making against the HAMP program and no doubt share some of the frustration of troubled borrowers, amazingly they remain optimistic and claim they are on track to meeting the goal of 3 to 4 million modifications by 2012. Apparently 2012 will not only be the end of a Mayan calendar cycle but also a turn in the American mortgage industry cycle also.

To be fair, there are other indicators that allow for some optimism. According to the Treasury Department one in four troubled homeowners had received a permanent or trial loan modification. Also, big banks like JPMorgan, Chase & Co. and Citigroup which previously had lagged behind in modifications are leading the way with loan modification rates of over 33%. On the negative side, Bank of America, the biggest playing in the park, dragged their corporate feet with a 19% permanent modification rate.Â But even this negative rate comes sugar coated as Bank of America started 34,000 new trial loan modifications in December 2009.