Treasury releases first HAFA and second-lien modification numbers
Another 27,000 homeowners began participating in Treasury Department initiatives in February to promote short sales and second-lien modifications. Workouts through the Home Affordable Modification Program stayed relatively flat again in February from the prior month with 26,147 permanent modifications started. Participating mortgage servicers have started 633,754 permanent modifications since the program launched in March 2009. New permanent HAMP modifications averaged 28,000 over the last six months. But under HAMP, the Treasury started the Home Affordable Foreclosure Alternatives program in April 2010. Through it, servicers, investors and the borrowers themselves are given incentives to pursue a short sale if a HAMP modification in unattainable. Through February, servicers started 10,488 agreements with homeowners and completed 4,488 short sales under HAFA. In December, the Congressional Oversight Panel found the Treasury spent roughly $4.3 million on HAFA incentives. The top-four banks committed to the Second Lien Modification Program, or 2MP, in April 2010. Fannie Mae directed its servicers to begin participation in the program in January 2011. Through February, mortgage servicers provided 16,951 second-lien modifications through 2MP through February, according to the Treasury. "The latest data underscore the importance of continuing our efforts to help families stay in their homes,” said acting Assistant Secretary for Financial Stability Tim Massad. "We are also working hard to implement additional programs to assist families in the hardest-hit states. We will continue these efforts so that we help more Americans remain in their homes and help our nation recover from this crisis." The Treasury's report comes two days after the House of Representatives, led by Republicans on the House Financial Services Committee, voted to end HAMP two years before it was scheduled to. The 633,000 permanent modifications started will end up falling well short of 3 million or 4 million goal set by the Obama administration when the program began. Late in 2010, the Congressional Oversight Panel estimated that the program would avert 800,000 foreclosures at most. While many lawmakers and overseers believe the program has underwhelmed at best, HAFA is seen differently. Chris Hanson, of the Chris Hanson Law firm, a specialist in short sales, said these transactions coupled with REO sales represent half of the California market. The Treasury in its long defense of HAMP said it set the stage for more modifications and created a backbone around which proprietary programs could be designed. The same could be said for HAFA and short sales. A panel at the Mortgage Bankers Association servicing conference in February said HAFA will bring faster and cleaner short sales and as a result fewer foreclosures. "We need to get these short sales done in a timely fashion. A short sale today is a lot better than it was six months ago," said Abel Fregoso, vice president and national field short sale manager for Wells Fargo (WFC). Write to Jon Prior. Follow him on Twitter @JonAPrior.