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Treasury Revising HAMP Redefault Rates

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Fannie Mae and a third-party consultant are revising redefault rates for mortgages modified under the Home Affordable Modification Program (HAMP) released by the Treasury Department earlier in the month. The Huffington Post broke the story this week. The Treasury reported in July that those 3,643 mortgages permanently modified in Q309, 7.8% had fallen into 60-plus day delinquency six months after the conversion from a trial period. Of the 126,527 mortgages that received permanent modifications in Q110, 4.1% have fallen behind by 60 days or more. Those initial results drew extensive criticism. But Barclays Capital released a report soon after charging the Treasury of misleading the public by ignoring HAMP-modified loans 90 or more days delinquent in the report. A footnote the table provided by the Treasury read, “a HAMP permanent modification is canceled for non payment if it is more than 90 days delinquent.” Barclays analysts interpreted this to mean that the Treasury removed these loans from the delinquent numbers. In place of that table the Treasury responded in a revised June report: “Since the Making Home Affordable report was posted on July 20th, Fannie Mae, which administers the program, has reported to Treasury an issue in its implementation of the delinquency statistic methodology used to report performance of permanent modifications. Fannie Mae is now revising the data, and Treasury has retained a third?party consultant to provide additional review and validation. Upon completion of that independent review, a revised table will be provided.” A report released in June by the Office of Thrift Supervision (OTC) and the Office of the Comptroller of the Currency (OCC) reported a different view of the HAMP redefaults. At three months after a HAMP modification, 7.7% of were 60 or more days delinquent, compared to 11.3% overall. At three months, 16.7% of HAMP modifications were 30 or more days delinquent, compared to 24.6% of all modifications, according to the report. Write to Jon Prior.

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