The US Department of Housing and Urban Development (HUD) is negotiating with the US Treasury Department to secure incentive payments to give to the Federal Housing Administration (FHA) mortgage servicers that pull off successful modifications made under Home Affordable Modification Program (HAMP), according to Vance Morris, director office of single-family asset management at HUD. As the servicing industry continues to work through challenges in terms of implementing adequate technology and necessary staff to handle what many sources here are calling "overwhelming supply," FHA servicers might soon be looking forward to receiving workout incentives through FHA HAMP, similar to those paid out to servicers under the program administered through Treasury, Morris said. In a session on FHA and Ginnie Mae program updates, Morris noted the difference from previous conferences, when he was "shocked" by how few people attended. He added that HUD is working with the Treasury and is "close" to establishing a mortgagee letter that would establish a payment structure, likely to be administered by the Treasury under HAMP, which is funded through the Troubled Asset Relief Program (TARP). Morris also noted HUD is looking to come out with methods to address high re-default rates after modification. HUD is currently developing ways to "reduce the re-default rate but increase the number of people being helped," he said. The volume of mortgages securitized through Ginnie Mae channels continues to grow, according to Kathleen Gibbons, director of Ginnie's single-family mortgage-backed securities (MBS) division. Most of Ginnies MBS is made up of FHA loans. She noted the monthly volume averaged around $6bn in 2007, but swelled recently and was as high as $46bn last year. Write to Diana Golobay.