Treasury Raises Cap on HAMP to $35.5bn
The US Treasury Department raised the total amount of potential capped incentive payments for the Home Affordable Modification Program (HAMP) from $27.7bn to $35.5bn, according to the latest Troubled Asset Relief Program (TARP) report. Under HAMP, the Treasury gives capped incentive payments to mortgage servicers for the modification of loans on the verge of foreclosure. The incentive payments represent the potential amount paid to each servicer, borrower and lender involved in the program. The adjustments are made as the servicers report more or less eligible borrowers in their portfolios. Countrywide Home Loans Servicing received the biggest increase in its capped incentive payments when the Treasury raised it $2.2bn to a total cap of $6.7bn, the most of any other servicer in the program. In the summer of 2008, however, Bank of America (BAC) bought Countrywide. Although the two servicers operate independently, they combine to receive $8.3bn capped incentive payment under HAMP. The BofA increase of $665m to $1.6bn total was the fifth highest. JPMorgan Chase (JPM) received a $1.7bn increase, the second highest, when its total rose to $3.8bn, now the second most of any other servicer. The third largest increase went to OneWest Bank for $1.2bn, pushing its total to $2.1bn. Another notable increase came for Wells Fargo (WFC) when the Treasury raised its potential cap by $1.2bn to $3.6bn overall. The largest decrease for a servicer belonged to GMAC. The Treasury dropped its potential cap payments by $1.67bn to $1.8bn overall. The cut in HAMP funds is offset by another $3.79bn bailout announced earlier in the month. Receiving the second highest cut was Green Tree Servicing, based in Saint Paul, Minn. Its incentive fell $116m to $105m in total. The Treasury dropped Citigroup’s capped incentive by $105m to $1.9bn in total capped incentive payments. The Treasury initially posted a total cap for HAMP at $23bn when the program launched in March 2009. It raised the total again in September to $27.7bn. The new increase comes after the program reported 31,382 permanent modifications through November. Write to Jon Prior.