Cited: Reuters

The Obama administration on August 6 acknowledged it had underestimated the number of homeowners who fell seriously behind on their mortgage payments even after getting government help.

Treasury officials blamed the error on mortgage finance giant Fannie Mae, which acts as the program administrator for President Barack Obama’s $50 billion Home Affordable Modification Program (HAMP).

The program had been criticized for its overly optimistic estimates of the number of struggling borrowers helped by its subsidies of new mortgage terms.

Tiny Number Lasting

The actual numbers of permanent modifications that have lasted at least nine months through the end of May is tiny: just 4,764 borrowers. And 53,041 borrowers had one for at least six months through May.

Treasury said about 14.9% of the 4,764 borrowers who have had a permanent modification for at least nine months by the end of May had re-defaulted on their loan. That’s more than six times the 2.4% rate they reported on July 20.

For loans that had been permanently modified for at least six months, about 6.1% had re-defaulted, up from just 1.7% originally estimated. Re-defaults are defined as 90+ days late. For loans 60 days late and not yet in re-default, the number of borrowers in trouble is even higher.

For loans that had been permanently modified for at least nine months, 19.6% of the loans were at least two months behind on their payments, more than two and a half times the 7.7% rate first reported.

On loans permanently modified for at least half a year, 10.1% were 60 days or more behind on payments, compared to the 5.9% originally reported.

“We are confident that this data table correctly reflects the performance of the permanent modifications over time. Early program results indicate that the vast majority who receive permanent modifications through HAMP benefit from them and remain in the program,” said Treasury spokesman Mark Paustenbach.

The issue arose after several Wall Street analysts said the numbers Treasury first issued seemed suspiciously low. Treasury then asked Fannie Mae to review the numbers.

Issue with Fannie Mae Stats

Fannie Mae spokesman Brian Faith said his company found “an issue in its implementation of the delinquency statistic methodology.”

“Fannie Mae has now corrected the implementation and validated the revised table through review and verification by an independent third-party consultant contracted by Fannie Mae’s Internal Audit Group,” Faith said.

Treasury on July 20 said that the number of borrowers dropping out the program grew in June at almost twice the pace of those getting a permanent modification. Those figures were not revised.

The dropout rate could signal a rise in foreclosures in the second half of the year at a time when the housing market is still fragile and analysts fear another housing slump could threaten the nascent economic recovery.

About 91,000 borrowers dropped out of the program in June, putting the total number of dropouts at 530,000. At the same time, about 49,000 borrowers received a permanent modification in June, bringing that total to 389,000.

Just over 30% of those who joined the program have received permanent new terms for their loans since the program’s inception in March 2009. However, more than 40% of the roughly 1.3 million borrowers who joined the program have dropped out of it before they get new terms on their loans.

————————————————————————

My Take: People that are due faulty on their loans probably don’t have jobs anymore. Hopefully, these new terms on their loans were done while they were working. Maybe some of these people should have talked to real estate attorney before they got into the program. They might have had a better idea of what they were getting into.

I think if I would’ve been one of these people I would’ve talked to contracts Attorney before signing a new contract on mortgage. Then again, hindsight is always 20/20. That is the way it’s been with many foreclosures. Phoenix realtors are fighting to help people get a house and to keep it. I am sure realtors all over the country doing the same.

Piermont real estate is probably suffering just as much is California or Texas real estate. It is not just the realtors are having problems, homeowners all over the country are having problems. People who own Palisades real estate or Montana real estate or Texas real estate are having problems. They are all in the same boat. It may not be much consolation; most of them will not survive. I would still like to hang onto a small glimmer of hope for them in the economy

————————————————————————-

Other Resources

Flags Galore

One flag vendor is proud to tell its customers that it has been an Annin flag dealer for 20 years. Annin & Co. is the oldest and largest flag maker in the world, having begun operations in 1847. In fact, they stock nylon flags that include every state, country or personal interest category available, including custom flags, marine flags, military flags, British flags, and nautical flags, historical flags such as Betsy Ross flags, Irish flags, Italian flags, Christian flags and even POW MIA flags.