The Treasury Department is relying on Fannie Mae and Freddie Mac to oversee servicers participating in the Home Affordable Modification Program (HAMP), but the two GSEs have completed a very low percentage of those modifications on their own loans.

The Obama administration launched HAMP in April and so far 650,000 borrowers have been placed in trial modifications, including 150,000 borrowers in October.

Freddie Mac reported that its servicers have enrolled 88,000 delinquent homeowners in the HAMP trials and reduced their mortgage payments.  But only 471 borrowers had successfully completed the trial-payment period and received permanent modifications as of Sept. 30. Fannie Mae servicers have placed 189,000 borrowers in HAMP trials.  However, the government-sponsored enterprise said in its third-quarter financial report that only a "low percentage of our trial modifications had converted into completed loan modifications."

In their third-quarter securities filings, the GSEs cite several reasons for the low completion rate, including the time and difficulty servicers face in collecting borrower information to document and finalize the modifications.

"Because some borrowers may not make all the required trial period payments, and because of the additional time that has been provided to obtain the required documentation, it is difficult to predict the rate at which our trial modifications will convert into completed modifications," Fannie said.

The Treasury Department regularly reports on the number of borrowers in HAMP trials but not the completion rate.

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