HAMP redefaults approaching 50%

Nearly half of the 1.3 million homeowners who have accepted loan modifications under the Home Affordable Modification Program have washed out of the program, according to the latest report from the Treasury Department.

At the end of July, there were 421,804 homeowners enrolled in permanent HAMP loan modifications, and another 255,934 borrowers in active trial loan modifications.

All told, a total of 677,738 homeowners were in permanent or trial HAMP modifications. But almost as many borrowers had already washed out of the program -- 629,751.

Many analysts expect that more than half of HAMP loan mods will end up redefaulting. With fewer homeowners entering the HAMP pipeline -- only 24,577 new trial modifications were reported in July -- it's considered unlikely that the program will meet its initial goal of helping up to 3 million borrowers avoid foreclosure.

In releasing its "Housing Scorecard" for August, the Obama administration nevertheless offered a positive outlook on the overall housing picture, saying the HAMP program represented "just one, targeted piece of the administration's larger efforts on housing."

From April 2009 through the end of June 2010, the Federal Housing Administration (FHA) has also entered into 472,000 loss mitigation and early delinquency interventions, and loan servicers modified 1.4 million mortgages outside of the HAMP process, the scorecard noted.

The 3.15 million mortgages modifications started during the period was more than double the 1.24 million completed foreclosures.

After 30 straight months of decline, home prices have leveled off in the past year, although the overall housing outlook measures remain mixed, the scorecard said.

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