January Results Won't Rescue Obama Foreclosure Prevention Program

Republicans want to eliminate the Obama administration's $28 billion Making Homes Affordable foreclosure prevention program ("HAMP"). Today, a Congressional hearing was held to consider whether it and three others should be shuttered to cut the deficit. The hearing coincided with the release of the January report for HAMP. If Republicans didn't think the program was worth keeping around before, then the data for January isn't likely to change their minds.

Just 21,107 new trial mortgage modifications were started in January -- the fewest in any month since the program began in the spring of 2009. A slightly larger number -- 27,957 modifications -- were made permanent. That's also one of the weakest monthly results since 2009. Finally, of the modifications that were either trials or had been made permanent, 15,825 were cancelled. Here's a chart that shows the program's process the Treasury began reporting:

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As this program fights for its funding, the steady trickle of between 20,000 and 30,000 new trial modifications per month isn't likely to help its fate. Although a greater percentage of trial modifications have been made permanent in recent months due to weeding out weak applicants before providing them trial modifications, even the 73% conversion to permanent rate the report boasts only amounts to somewhere between 200,000 and 250,000 new permanent modifications per year. If the numbers of trials continue to decline, as they did in January by 10,000 applicants, then that estimate is optimistic. This is no where near the few million struggling homeowners the program was designed to help.

Through January, 539,493 permanent modifications remain active. During the month 10,094 permanent modifications were cancelled. That cuts the net number of permanent modifications for January to just below 18,000. Again, this pace is far below the expectations initially set by the administration.

In today's report, we still weren't provided with any data updates for the Treasury's targeted principal reduction program. That's a different modification effort meant to cut a borrower's mortgage principal, instead of extending the loan's term or temporarily lowering its interest rate like HAMP does. It sounded like the principal reduction program had the potential to have a bigger impact when announced about a year ago. Unfortunately, it could be as long as June until we get any data on the program's progress.