Failed HAMP Trials Grows 22%

The December HAMP Scorecard shows that the major loan servicers have failed to act on 266,136 delinquent mortgages.  These loan modifications have either been canceled out of trials or failed to qualify for a modification as of October.  The backlog has increased 22% since the first report on failed trials and loan modification requests in July.  As of October 1.5 million loans have either failed to go past trial or never qualified in the first place.

The initial program did not require all the documentation up front to qualify for a trial.  Now that information must be present and fewer new trials are failing as a result.  There is still a glut of 50,000 trials that have been in place for six months or more.

Around one third of the failed trials are put through an alternative loan modification process.  Around 562,000 loans have been processed through an alternative route.  Around 209,000 or 13% of the rejected trials or denied applications have proceeded to receive foreclosure filings.

Every month the major servicers have added to their backlog of failed modification trials.  The largest backlog is held by Bank of America with 73,185.  JP Morgan Chase held 60,612 failed modifications pending any action.  Citi Mortgage held 60,531 as of October.  Tim Massad, acting assistant secretary of the Treasury for financial stability said that clearly the banking system was not prepared to handle the massive number of foreclosures now clogging the system.