Article Courtesy of The Palm Beach
By Kimberly Miller
January 14, 2015
Permanent mortgage modifications offered through the administration’s centerpiece foreclosure prevention program dropped to their lowest level last year since the plan was first announced in 2009, according to a Government Accountability Office report released Tuesday.
The participation drop, coupled with fewer than expected applications in other federal programs, means there may be an $11 billion surplus in Troubled Asset Relief Program funding when the plans sunset, according to the Congressional Budget Office.
The key federal program is the Home Affordable Modification Program, or HAMP. The plan reduces monthly mortgage payments on eligible loans, and has awarded 1.4 million permanent modifications in five years. The modifications resulted in a median monthly mortgage reduction of $490 per month.
But beginning with the third quarter of 2013, the number of new permanent modifications has declined from 46,000 to 29,000 in the third quarter of 2014.
The Treasury Department said the decline is a “reflection of the shrinking pool of eligible mortgages, as evidenced in the declining number of 60-day-plus mortgage delinquencies.”
According to a 2014 second quarter report from the Mortgage Bankers Association, mortgage delinquencies fell to 6 percent nationally, the lowest level since the fourth quarter of 2007.
Tuesday’s report notes that Treasury, the Department of Housing and Urban Development and the Ad Council launched a new series of public service announcements in September to raise awareness of the foreclosure prevention programs available.
The programs’ application periods have also been extended three times, now sunsetting on Dec. 31, 2016.
In total, $38.5 billion has been set aside for federal foreclosure prevention plans. As of the end of September, 36 percent had been spent.