The Treasury Department released revised re-default rates for the Home Affordable Modification Program (HAMP), and the higher rates are more in line with analyst expectations. Fannie Mae and a third-party consulting company revised the new re-default rates after the previous ones were withdrawn from the report. Those initial results drew extensive criticism, because the Treasury excluded the permanent modifications that had been canceled for falling into 90-day delinquency. Analysts at Bank of America Merrill Lynch Global Research received and published the revised re-default numbers. The first chart below shows the revised numbers, according to the BofA report, and the second chart is the original re-default statistics released by the Treasury in July. The difference in the numbers widens as modifications grow older. For instance, of the modifications completed in Q309, 9.7% had fallen into 60-plus day delinquency three months after the modification, relatively close to the 10.5% reported by the Treasury earlier. However, after six months, 14.8% of the loans had fallen 60 days or more behind, as opposed to 7.8% originally reported, and 9.7% of them had fallen behind again by 90 days or more, instead of the 2.3% reported in July. After nine months, 19.6% of those loans had fallen 60-plus days behind, instead of the 7.7% previously reported. But BofA Merrill Lynch analysts said critics of the program aren’t yet vindicated on their calls that HAMP is a failure. “While the increased re-default rates will provide more ‘fodder to those in the camp’ that regards HAMP as a failure, we do not think the story is so simple,” according to the report. The analysts said the revised re-default rates are in line with what they expected. While the “explicit goal” of HAMP to help 3m to 4m homeowners “appears unattainable at this point,” its “implicit goal” to stall the foreclosure process and provide some order to the flow of properties into REO status has been achieved, according to the report. “In our view, the implicit goal has been one of the key reasons for the stabilization in home prices,” according to the BofA Merrill Lynch report. Write to Jon Prior.

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