Posted on 09/10/2013 12:45:11 PM PDT by whitedog57
Late this week, Treasury will report on the performance of servicers in delivering Making Home Affordable (MHA) programs. I understand Treasury will drop everyone’s ratings and do so with little explanation other than that they moved the bar to make required levels more stringent because too many servicers were hitting their highest rating.
You know, its like telling Peyton Manning that throwing 7 touchdowns in the game against the Baltimore Ravens wasn’t good enough. He should have thrown 10 TDs!
Treasury can continue to raise the bar on servicers and lead people to believe the servicers aren’t doing what is required of them, but the fact remains HAMP has been flawed in design since the start. The fact that servicers have done so well in a horrid housing and employment market is amazing in and by itself.
To highlight my point, here is a chart of CoreLogic’s house price index and U6 unemployment. HAMP started in March 2009, so I have boxed the area with a yellow line. Try doing government mandated loan modifications with declining house prices and rising unemployment and see your success rate, particularly with the constant rule changing by the government.
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Rising serious delinquency rates continued rising after HAMP started. Momentum (whether good or bad) is a difficult tide to fight.
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Here is the Treasury/HUD scorecard for July, 2013. Over 2 million households have been helped since April 1, 2009.
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The government mortgage modification programs were poorly designed and changed constantly (adding to the confusion). Raising the bar for servicers is a bad idea, since 2 million households helped in terrible market conditions is really pretty good.
And a note to borrowers. Don’t sign for a loan if you don’t understand or don’t like the terms.
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