An odd way to measure the success of mortgage mods

The Obama administration has an odd way of assessing the results of its $50bn Home Affordable Modification Program, or HAMP. When the program was announced a year ago, the administration said it would “offer reduced monthly payments for up to three million to four million at-risk homeowners,” people in danger of losing their homes to foreclosure. That phrase, though qualified by the words “up to,” set high expectations. Given the complexities of the program and the bureaucratic inertia of the big banks that are struggling to carry it out, it isn’t very surprising that the results so far have failed to meet those expectations. As of Feb. 28, 168,703 households had “permanent” loan modifications under the program, while 835,194 were in the trial stage. Borrowers accepted for the program are expected to make three monthly payments before their modifications can be deemed permanent, though in many cases it’s taking far longer for the banks to decide whether to proceed with a long-term mod. Many of the people in trial mods will crash out of the program. Some are unable or unwilling to document their financial situations; others turn out not to qualify once banks take a closer look at their finances. Some fail to keep making the reduced payments.

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3d rendering of a row of luxury townhouses along a street

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