Government Gives Itself High Marks on New Housing Scorecard

Tue, Jun 22, 2010


By: Carrie Bay

The U.S. Treasury and HUD on Monday released a new monthly scorecard, touting the success of the administration’s full scope of efforts to stabilize the nation’s fraught housing industry. HUD Secretary Shaun Donovan called the new scorecard a snapshot of the “total picture,” illustrating just how far the market has come back from the depths of a crisis. “There is no doubt that today’s housing market is in significantly better shape than anyone predicted 18 months ago,” Donovan said on a conference call with reporters. Since April 2009, the scorecard shows that 6.1 million homeowners have refinanced into new mortgages and 2.8 million have received modified mortgages. The numbers take into account the government-based initiatives – Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP) – as well as servicer-specific programs. Donovan says the administration’s programs have created a new, higher standard for the industry’s other proprietary refinance and mod procedures, leading to more affordable, significant payment reductions for struggling homeowners across the broader spectrum. By comparison, the government’s data shows that 1.15 million foreclosures have been completed since April 2009, and Donovan pointed out to the media that the number of modifications alone is nearly three times the number of concluded foreclosures over the same period. It’s HAMP that has taken the most criticism, with some lawmakers going so far as to call the program an “abject failure,” congressional watchdog groups repeatedly questioning its true effectiveness, and even some servicers commenting that HAMP isn’t doing enough and shifting their resources instead to the new short sale program to get non-paying borrowers out of the home. The Treasury’s regular monthly progress report on HAMP has now been rolled into the new, more expansive housing scorecard. It shows that through May 2010, servicers had placed 340,459 borrowers into active permanent modifications. Trial plan offers have been extended to 1,507,018 homeowners – nearly half of the 3,180,615 that Treasury estimates are currently eligible for the federal program. Since the beginning of the program, 429,696 HAMP trials have been cancelled and 6,357 permanent mods have been terminated. That represents a significant subtraction from the progress that’s been made, but Donovan called these “legacy cancellations,” and explained that the administration has asked servicers to go through a series of quality controls to remove trials appropriately. He also offered some additional numbers on the call with reporters, in an attempt to dispel some media assumptions that if a borrower doesn’t receive a permanent restructuring, the next step is foreclosure. Donovan says nearly half, 49 percent, of homeowners who do not qualify for a permanent plan have ended up in an alternative servicer modification with comparable payment reduction benefits. He says only about 7 percent of canceled trials have moved to foreclosure, while 9.8 percent have become current and 1.1 percent have paid off their loans. The scorecard incorporates other key market indicators. For example, it shows that after 30 straight months of decline, home prices leveled off in the past year and expectations have adjusted upward. Donovan says homeowners have recovered more than $1 trillion in lost equity since the first quarter of 2009. Going forward, the scorecard will also include data from the Home Affordable Foreclosure Alternatives (HAFA) program, President Obama’s Hardest Hit Fund, and other initiatives. With this scorecard, Donovan said, “We want to be judged and held to a high standard for all our housing efforts.”

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