The U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury have jointly released the May edition of the Obama Administration's Housing Scorecard. Data in the May Housing Scorecard show promise as indicators continue to show signs of stability, though officials caution that the overall outlook remains mixed. Sales of existing homes rose 2.4 percent in April, increasing in every region of the U.S. In addition, the inventory of newly constructed houses increased for the first time since April 2007. Since sales outpaced inventory levels, the supply of homes on the market dipped to 5.1 months from 5.2 months in March and a peak of 12.2 months in January 2009. Distressed sales remain a key factor, however, as the impact of serious delinquencies and underwater mortgages continue to temper market gains.
“This month’s indicators show promise—more than 180,000 borrowers took advantage of our enhanced Home Affordable Refinance Program in the last quarter alone and foreclosure starts are declining as more homeowners secure mortgage relief—but with so many households still struggling to make ends meet it’s clear that we have more work ahead," said HUD Acting Assistant Secretary Erika Poethig. “That is why we are asking the Congress to approve the President’s refinancing proposal so that more homeowners can receive assistance.”
Included in this month’s Making Home Affordable Program Report are detailed assessments for the largest mortgage servicers participating in the program with results from the first quarter of 2012. The Servicer Assessments—first introduced in June 2011 and published quarterly—have set a benchmark for disclosure around servicer efforts to assist struggling homeowners. The Q1 of 2012 assessments show that the largest servicers continue to demonstrate broad improvement in implementation of the Making Home Affordable Program, and have focused attention on remediating past areas of need identified by Treasury through ongoing program reviews. For the second consecutive quarter, no mortgage servicer was found to be in need of substantial improvement.
“The Administration’s programs have established critical standards and accountability for mortgage servicers that have compelled the industry to provide higher quality assistance to struggling homeowners; however, servicers still have more work to do,” said Treasury Assistant Secretary for Financial Stability Tim Massad. “This month, expanded eligibility for the Making Home Affordable Program becomes available to help more families benefit from the program’s sustainable assistance and homeowner protections.”
Since inception of the Making Home Affordable Program, the Treasury Department has required participating servicers to take specific actions to improve their processes through ongoing program reviews. The Servicer Assessments summarize performance on metrics in three categories of program implementation: Identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management and governance.
For Q1 of 2012, three servicers were found to need only minor improvement with respect to the specific metrics evaluated. Six servicers were found to need moderate improvement. All servicers must continue to demonstrate progress and program compliance through ongoing reviews. Treasury continues to retain the right to withhold program incentives from mortgage servicers in future periods if necessary.
The release of the First Quarter 2012 Servicer Assessments coincides with the availability of expanded program eligibility for the Making Home Affordable Program announced by Treasury in January. The new criteria expand program eligibility to include homeowners with a debt-to-income ratio below 31 percent, properties occupied by a tenant and vacant properties which the borrower intends to rent. As of June 1, 2012, servicers have informed Treasury that they have begun accepting HAMP Tier II modification requests from homeowners.
As the Administration continues to push servicers to provide more effective assistance to struggling homeowners, the ongoing recovery of the housing market demonstrates the need for the Administration’s continuing efforts. The May Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:
►The Administration's foreclosure programs are providing relief for millions of homeowners as the housing market continues to recover from an unprecedented crisis. More than 1.1 million homeowner assistance actions have taken place through the Administration’s Making Home Affordable Program, while the Federal Housing Administration (FHA) has offered more than 1.3 million loss mitigation and early delinquency interventions. The Administration's programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals nearly 2.9 million proprietary mortgage modifications through April.
►Homeowners entering HAMP demonstrate a high likelihood of long-term success in the program. As of April, more than one million homeowners have received a permanent HAMP modification, saving approximately $535 on their mortgage payments each month, and an estimated $12.7 billion to date. Eighty-six percent of homeowners entering the program in the last 22 months have received a permanent modification, with an average trial period of 3.5 months. Seventy percent of non-GSE customers entering HAMP in recent months have received some form of principal reduction with their modification. Those participating in the HAMP Principal Reduction Alternative (PRA) have seen a median principal reduction of $68,267, or 31 percent.
