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Fully excused second-lien mortgages spike in June

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Servicers participating in the Home Affordable Modifications Program extinguished more than 1,000 second-lien mortgages in June, according to Treasury Department data. Fannie Mae, which administers HAMP, directed participating servicers to begin modifying second liens on Jan. 1. Defaults on second mortgages dropped to 1.4% in June, according to the Standard & Poor's/Experian index, down a full percentage point from a year ago. At least through HAMP, modifications on these loans have been steadily climbing since Fannie directed its servicers to participate in the 2MP program (The chart below notes that the 2MP actions reported in June may actually have a start date in July, thus the varying month on the chart).

Since January, the cumulative amount of these modifications started increased to 33,715 in June from 5,568 in January.

In June, participating servicers started nearly 5,000 second-lien modifications while disqualifying 288 others, including those paid off. Servicers are ended more second-liens, as well. In May, servicers reported 1,500 extinguished second liens, but that number spiked to a total 2,564 by June. Bank of America (BAC), Fannie's largest servicer, leads other participants in 2MP. The Charlotte,N.C.-based banking giant started 14,734 second-lien mods through July, more than twice the nearest competitor, Wells Fargo (WFC), which started 7,100. BofA has extinguished 1,377 second-liens so far. The next closest was CitiMortgage, the servicing arm of Citigroup (C), which wrote off 791 second liens through July. The average amount of the second-liens excused through 2MP was $67,371 at the end of July, up from roughly $65,000 the month before. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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