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Third-quarter HAMP trials plunge 84% from year ago

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The Treasury Department's Home Affordable Modification Program is dwindling. According to data released last week from the Office of the Comptroller Currency, lenders started 43,739 new, three-month HAMP trials in the third quarter, down 84% from the peak of 272,709 a year ago. New trials have been on the decline ever since lenders reported, on average, 57,000 fewer trials than the quarter before. The biggest drop came in first quarter of 2010, when lenders offered 118,000 fewer trials than the previous quarter. "I think the program is turning out to have a lot less impact on the market than we thought it would have," said Sen. Ted Kaufman (D-Del.), chairman of Congressional Oversight Panel after it released a scathing report on HAMP last month. The Treasury launched HAMP in March 2009 to provide an incentive to servicers for the modification of loans on the verge of foreclosure. At the time, the Obama administration said the program would help 3 million to 4 million homeowners avoid losing their home. Under such political pressure, servicers began putting homeowners into three-month trials without checking for documentation. When a backlog began forming, administrators put renewed emphasis on converting more into permanent modifications, while the Treasury changed the rules prohibiting a new trial until all the documentation was in from the homeowner. But permanent modifications are down, too. Lenders reported 58,790 permanent conversions in the third quarter, according to the OCC, down 45% from the previous quarter but well above the 783 reported in third quarter of 2009 when the program was only six months old. But through October, lenders converted 519,000 trials into HAMP permanent modifications. Meanwhile, lenders foreclosed on 382,000 homes in the third quarter, a 31.2% jump from the previous quarter, according to the OCC. Private programs have generated more than 175,000 modifications in the third quarter alone, more than three times the amount of HAMP mods in the same time. These private modifications have increased every quarter since the end of last year and remain 34% above totals from the third quarter of 2009. But the OCC said HAMP's underperformance dragged down home retention actions across the board. Permanent and trial modifications in both private programs and HAMP combined with other payment plan options totaled 470,321 in the third quarter, down 32% from a year ago. Write to Jon Prior.

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