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Friday, July 15, 2011

25% of Citi's private mortgage modifications redefaulted

I know that HAMP has been a failure and there even been claims that trial modifications applicants were artificially approved, then later decline to meet some goal for the number modifications that was never realistic.  However, there has never been a good gage on the private modification side.   Although better than HAMP, 25% is horrible.  If you reach 50% is better just to cancel the program?  Also is this typical of all banks are just Citi.
Roughly 25% of the mortgage modifications Citigroup (C: 38.38 -1.64%) completed through its own private programs redefaulted over the past two years, the bank's Chief Financial Officer John Gerspach said Friday.
Over the past nine quarters, the bank converted $5.7 billion in a trial modification into permanent status. More than three-quarters of these went through the government's Home Affordable Modification Program. Redefault rates on these HAMP workouts totaled less than 15% (not true, notes by NOCBlog).
See why further in the article.
The Treasury Department launched HAMP in March 2009 and although it resulted in a fraction of the originally estimated 3 million to 4 million modifications, it provided a skeleton around which banks could design their own programs. At the same time, HAMP experiences redefault rates far less than these private initiatives
CalculatedRisk has a breakdown of the real HAMP default rate.

Article Here

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