Whose Mortgage Is the Government Modifying Anyway?

For a few years now, we've been hearing about the government's mortgage modification program ("HAMP"), but it hasn't been clear who, in particular, is benefiting. Although the program hasn't come near the goals it sought -- to prevent a few million foreclosures -- over a half million Americans have obtained permanent modifications through HAMP. This month, the Treasury provides some data to tell us a little about the Americans who have managed to qualify for its program.

December HAMP Update

But before getting into those statistics and charts, here's the quick update on the program's progress through December:

HAMP master 2010-12.png

Last month, the number of new trial modifications started was around 30,000 -- steady at the level we've seen since September. The number of modifications made permanent also appears to be leveling off at around 30,000 per month. Finally, like last month, about 18,000 modifications were canceled. But in December, the ratio shifted to more permanent modifications canceled than trials. Permanent modification cancellations peaked in December at 13,000.

The program also appears to continue to do well in terms of re-defaults. Its rates are steady to what we saw in October through the second quarter. Through November, after one year just 20.4% of modifications were 60 or more days delinquent, and just 15.8% have payments 90 days past due. That might sound like a lot, but re-default rates for mortgage modification programs often exceed 50%, so these results look pretty great -- if they hold up. It's important to remember that many HAMP modifications include terms that have monthly payments reset to higher rates for several years. So we won't know a true re-default rate until as least 2014, but so far so good.

There's not a whole lot of additional analysis to provide here at this point, as the program appears to have become very stable at its rate of growth, which is about a net 12,000 new modifications each month. As of December, the number of active permanent modifications hit 521,630. You can see by these statistics that it's rather unlikely the number of successful modifications will reach one million, however.

Who's Participating?

As mentioned, this month the Treasury provided us a real treat: a glimpse into the Americans that are benefiting form its program. You could argue that it would have been nice for the Treasury to provide this data from the beginning, but better late than never.

Income Distribution

First, here's a chart I re-created based on the income distribution that the Treasury provides. Theirs used income per month, but I thought multiplying the ranges by 12 to show annual income would be more useful for readers:

income HAMP 2010-12.png

You can see a clear concentration of income in the $24,001 to $60,000 range, which accounts for 61% of HAMP permanent modifications.

Balance Size

So how big are the mortgages that are being modified? The Treasury provides that info too:

principal bal hamp 2010-12.png

Here, there's a little bit wider of a distribution. The biggest concentration is from $100,001 to $300,000, which accounts for 60% of the balances of permanently modified mortgages. Considering the income concentration, this makes sense.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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