Mortgage servicers modify 63% of HAMP-eligible second liens
Mortgage servicers started modifications on 63% of eligible second liens under the Home Affordable Modification Program, according to Treasury Department data released Friday.
Through February, servicers participating in 2MP started 71,133 second-lien workouts of the 113,774 eligible loans. More than 15,600 of them have been fully extinguished. More than one-third of the second-lien mods occurred in California, according to the Treasury.
Of the $29.9 billion allocated for HAMP, roughly $2.7 billion is set aside for modifying second liens, according to the Special Inspector General for the Troubled Asset Relief Program.
In January, the Treasury boosted incentives to investors who allow the workouts, doubling the pay from earlier in the program.
In order for a loan to be eligible for the second-lien program under HAMP, the servicer must receive notification of a match with a permanent first lien modification, according to program guidelines. The Treasury said roughly 315,000 HAMP first-lien mods have been matched to a second, but many are deemed ineligible because of a redefault on the first lien, an extinguishment before it entered HAMP.
In some cases, the Treasury said some homeowners with an eligible second decline to participate in 2MP.
Bank of America (BAC) has nearly 40,000 eligible second-liens, the most of any servicer, and has started modifications on 62% of them.
Wells Fargo (WFC) started workouts on 71% of its 16,300 eligible seconds, the highest percentage of any servicer.
Overall, servicers start modifications on between 2,000 and 5,000 second-liens under 2MP. The median monthly payment reduction was $161 for borrowers.
Servicers started 1.8 million trial modifications and completed 974,000 permanent workouts under the first-lien program through February.