American Home Mortgage Servicing Inc. has announced its participation in the Home Affordable Modification Program (HAMP), a key component of President Barack Obama Administration’s Making Home Affordable Program to help struggling borrowers reduce their mortgage payments to affordable levels. In connection with AHMSI’s participation in HAMP, the Treasury has allocated a cap of $1.272 billion as interest rate subsidy and incentive payments, which potentially can be earned by AHMSI, borrowers, and investors of successfully modified loans under HAMP.
“We’re extremely pleased to have worked through many details of the program with the Treasury and its financial agent, Fannie Mae. They have been very cooperative and professional partners in this process. We are glad to be a part of the program,” said David Friedman, CEO. “HAMP is generally consistent with the approach we had been using to prevent avoidable foreclosures.”
During the 12 months ended June 30, 2009, AHMSI completed more than 64,000 loan modifications, including nearly 37,000 in the first six months of 2009. This number of modifications represents more than 15 percent of AHMSI’s entire portfolio and more than 50 percent of the average 30-plus delinquency.
At the end of May 2009 and based on the prior 18 months of data, almost 72 percent of borrowers whose loans were restructured are current after six months. This compares with reported industry averages of less than 60 percent and is due to AHMSI’s loan modification approach of tailoring borrowers' monthly payments to an affordable amount, based on verifiable income and expense information provided at the time a loan is reviewed for modification. Friedman indicated that AHMSI will continue to use this methodology within the context of HAMP. Furthermore, in 86 percent of AHMSI modifications, borrowers experienced a payment reduction. The average reduction was $544, or 30.5 percent. The company anticipates that loan modifications under HAMP will likewise result in similar payment reductions for borrowers.
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