Mortgage servicers signed off on 33,300 permanent HAMP modifications in August — the lowest number of completed restructurings since December 2009 when the Obama administration's foreclosure prevention program was just getting off the ground.
The Treasury Department's latest update on the Home Affordable Modification Program (HAMP)also shows 56,700 borrowers participating in the HAMP trial payment modifications did not qualify for a permanent mod and were cut from the rolls.
Overall, the August HAMP report portrays a program that has lost momentum as servicers weed out borrowers that have been on payment trials for more than six months and who cannot qualify for a permanent one because of documentation problems or missed payments.
The number of borrowers in the payment trials fell to 202,500 in August, down from 364,100 in June.
The drop in payment trials started a few months ago when Treasury switched gears and required servicers to verify borrowers' incomes and debt-to-income ratios before entering the three-month trials.
More than 26,600 distressed borrowers were approved to start the three-month payment trials in August, up from 24,600 in July, but down 31% from June.
Since August 2009, over 1.3 million borrowers have entered the HAMP trials and servicers have approved 468,058 permanent modifications. Roughly 19,000 homeowners have dropped out of the permanent modifications or re-defaulted.
Treasury said it would provide re-default rates in its September HAMP report.