The government's embattled Home Affordable Modification Program (HAMP) lost momentum in January as the number of newly approved loan restructurings fell below 30,000 for the first time since October.
HAMP servicers approved nearly 28,000 permanent loan modifications in January, down from 30,030 the previous month, according to Treasury Department figures released this week.
Next week the House Financial Services Committee is set to vote on legislation to end the program.
On Thursday the Republican controlled committee voted 33-to-22 to end two foreclosure-prevention programs but punted on a HAMP vote (until next week.) No matter what happens on the vote, the Senate is not expected to consider similar legislation.
Republicans in Congress want to kill HAMP, calling it a failure. (Just over 500,000 mortgagors have benefitted compared to an original target goal of 4 million.)
However, during the summer servicers retooled their procedures for qualifying borrowers to enter the three-month HAMP trial, which slowed the approval process.
The modification program that lowers the interest rate and extends the term of the loan seemed to be gaining steam in November and December but winter storms may have impacted the number of new approvals in January, as well as re-defaults. (The number of re-defaults fell to 10,100 in January from 13,050 in December.)
HAMP modifications have performed much better than proprietary ones. Still, the program is in danger of stagnating if re-defaults relative to newly approved mods remain at current levels.
As of Jan. 30, the number of homeowners making payments on the HAMP modified loans totaled 539,500, a gain of 17,860 from December.
Since HAMP was launched in the spring of 2009, 68,100 borrowers approved for a modification have dropped out of the program. Most re-default, while some pay off their modified loan.
