Mortgage modifications rose in September
WASHINGTON (Reuters) - The Obama administration's main home foreclosure prevention program saw a substantial boost in permanent loan modifications in September, in part due to improved technology for reporting the status of cases.
U.S. housing authorities said on Thursday that the Home Affordable Modification Program, known as HAMP, helped 40,141 homeowners achieve a permanently lower mortgage payment in September -- up from 25,434 homeowners in August.
The U.S. Treasury Department and the Department of Housing and Urban Development said 856,974 homeowners had been granted permanent loan modifications since the program was launched in 2009. But 136,362 of these reductions had been canceled -- an increase of 10,064 in September.
When it launched the program, which provides financial incentives to servicers who rework mortgages for struggling borrowers, the Obama administration had hoped it would reach as many as 5 million borrowers. So far, the program has started 1.71 million trial and permanent modifications.
In the September data, the agencies said that some permanent modifications were previously reported as "aged" trial modifications due to problems that prevented mortgage servicers from reporting them as permanent modifications. The technical changes allowed these loans to be put into the permanent category, the agencies said.
The latest housing report also included -- for the first time -- data on refinancings of "underwater" mortgages through the Home Affordable Refinance Program, known as HARP, which President Barack Obama aims to expand by eliminating loan-to-value caps for borrowers who have kept up their payments despite owing more than their dwellings are worth.
In August, the latest month for which data from the Federal Housing Finance Agency is available, 28,900 homeowners refinanced under HARP, compared with 26,500 in July. The program, which only helps those with loans owned or backed by government-controlled mortgage giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), has refinanced 894,000 borrowers since its 2009 launch.
Only a limited number of borrowers could take advantage of the program because refinancing loans were limited to 125 percent of a home's appraised value. And home prices have simply fallen too far in many markets for the program to be of help.
Under program revisions to be published later this month, there will be no limit, and the appraisal process is to be streamlined using computer valuation models.
The FHFA has estimated that given low mortgage rates, the changes could more than double total HARP refinancings by the end of 2013.
(Reporting by David Lawder; Editing by Andrew Hay and Jan Paschal)