BofA Permanent HAMP Modifications Jump from 98 to 3,200 in December
The Bank of America (BAC) book of permanent loan modifications under the Home Affordable Modification Program (HAMP) grew from 98 mortgages by the end of November 2009 to 3,200 by January 2010, according a company announcement. In the US Treasury Department's November progress report, BofA completed 98 permanent modifications from the program's launch in March 2009 through November. Since then, nearly 3,200 borrowers received a completed HAMP modification, and another 12,000 of the BofA borrowers sent their finally modified loan documents under HAMP to be signed and returned by BofA. After the reported 98 permanent modifications, BofA announced a shift in focus from signing up more HAMP trials to finalizing documentation for those already in the three-month trial process, according to Jack Schakett, a credit loss mitigation strategies executive at BofA. The early focus of the program, he explained, was to get as many distressed borrowers as possible into a trial, even without gathering all documentation, if necessary. He said the participating servicers agreed to collect the documentation during those three-months, but because of the volume – more than 1m trial modifications offered through November – the process quickly slowed to a standstill. However, a spokesperson with the Treasury tells HousingWire that a December progress report updating numbers from all HAMP servicers is being released tomorrow, which should provide a clearer picture on the program's progress. Under HAMP, the Treasury provides capped incentives to servicers for the modification of loans on the verge of foreclosure. According to the latest reports from the Treasury, BofA receives a $1.6bn cap on incentive payments. No servicer receives a payment until a HAMP modification becomes permanent. Further down the waiting list for a permanent modification, BofA finished underwriting and processing documents for 20,000 borrowers in December, moving them out of the trial period and into the final stages of a permanent conversion. Behind them, more than 200,000 borrowers got in line and entered into a HAMP trial modification through BofA. The Treasury issued an original deadline of Dec. 31, 2009 for servicers to collect all the necessary documents, otherwise risk having to drop borrowers from the program, even if they made each of the three-month trial payments. The Treasury extended the deadline, and BofA reported that no one was left out. "As a result of the extensions, none of the Bank of America customers who successfully completed a trial payment plan has been eliminated from the program for failing to meet a government deadline for documents. Mortgage servicers have been able to significantly increase the number of modifications moving toward completion, and we expect the rate of conversions to continue rising,” Schakett said. Even if the numbers improve in the Treasury report Friday, analysts continue to see key flaws in the structure of the program. Laurie Goodman of Amherst Securities warned in testimony before Congress, that HAMP failed to address negative equity and did little to reduce principal. She even went so far as to say HAMP was “destined to fail” because many servicers are not equipped to handle the underwriting, the program does not consider the borrower’s total financial circumstances and it does not emphasize “re-equificaton” of the borrower. Write to Jon Prior.