Report Says Almost Half of Homeowners in HAMP Default Again

Sigtarp, a report from the Troubled Asset Relief Program, showed that borrowers who had their mortgage payments reduced under the Home Affordable Modification Program (HAMP) are still having trouble keeping up with their payments, despite having their payments reduced on average by more than $400 a month.

During the third quarter of 2009, forty-six percent of permanent HAMP modifications issued during that time have re-defaulted, according to Sigtarp. Of those who modified their loans under HAMP during Q4 2009, almost 40% defaulted again.

The report also points out that the longer a homeowner is in HAMP, the more likely they will re-default out of the program. So far, about 860,000 borrowers have active HAMP modifications and 290,000 have been removed from the program.

However, the report also pointed out that there have been improvements in the loan program. A Wall Street Journal article noted that approximately 11% of HAMP modifications made in late 2011 have defaulted after one year, compared to more than 20% when the program was launched four years ago. Sigtarp further states that HAMP modifications typically outperform loan modification programs from private lenders.

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