Professional Home Staging and Photography Blog: HAMP improving subprime mortgage performance

HAMP improving subprime mortgage performance

Las Vegas, Nevada, homeSubprime home loans became a noteworthy ingredient in the recent real estate frenzy. Large pools of them were sold on the secondary mortgage market as RMBS, or residential mortgage-backed securities, to supply additional liquidity for more loans. When the air suddenly escaped from the tremendous housing bubble the first mortgage product to absorb its swift and devastating effects was the subprime kind, leaving scores of investors wondering what had whacked them.

Moody's Investors Service details that subprime RMBS issued from 2005 to 2008 reached a delinquency level of 54.4% in January of 2010, an all-time high. From there on, though, the rate has been steadily falling, settling at 51.5% in April, a moderate improvement. But it had been climbing continuously for years since the real estate market's collapse, so a change downward, even if slow, is desirable news. In short, subprime mortgage borrowers are bringing their loans current at an increasing rate. Everybody likes to see that.

According to Moody's research HAMP, or Home Affordable Modification Program, has been a major contributor to this. HAMP has received sometimes loud criticism for its lack of bite, but Moody's numbers appear to show otherwise. In January 117,302 trial modifications were converted into active permanent ones and then in April the same happened to 299,092 of them. That's real progress.

Re-defaults are still a problem, however. Moody's estimates that 50-70% of permanent mortgage loan modifications will do so, thanks to the underwater, or negative equity, dynamic affecting so many states. Worst-mauled areas like Las Vegas and Phoenix are extremely ripe here. The emphasis now from the government is to get home loan lenders and servicers to lower principal for borrowers, a task that has been tough in the past and probably will stay so.

It seems that HAMP needed quite a bit of time to get in gear and now it's cruising along under full power and is showing some encouraging results.



Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 14 commentsEsko Kiuru • June 17 2010 09:04PM



Those are some wildly serious numbers; talk about an all time high.

Posted by Tom Braatz Waukesha County Real Estate 262-377-1459, Waukesha County Realtor Real Estate agent. SOLD! (Coldwell Banker) almost 9 years ago

Esko - HAMP has improved its numbers, but still has a long way to go to reach the numbers originally promised.  I guess we should be thankful for those who do receive help, but I'm concerned by the possibility that almost three-quarters may re-default.

Posted by John Mulkey, Housing Guru ( almost 9 years ago


The numbers sound better than the percentages, but I agree progress is progress.


Posted by Steve, Joel & Steve A. Chain (Chain Real Estate Investments & Mortgage, Steve & Joel Chain) almost 9 years ago


More than half of RMBS are still delinquent, despite the improvement, that is mind-boggling.

Posted by Esko Kiuru almost 9 years ago


The original estimate was pure politician talk and of course wildly optimistic.

Posted by Esko Kiuru almost 9 years ago


Any progress we can find is soothing music to mortgage-backed securities investors' ears.

Posted by Esko Kiuru almost 9 years ago

Esko in the mist of all the negative news, any positive news is a welcome.  Let hope things begin to turn around in all areas.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) almost 9 years ago


I saw some of those numbers on projection for new defaults with modified mortgages. It just means we are far from out of the foreclosure problem.

Posted by Richard Byron Smith, NMLS #184479, Mortgage Loan Officer (Mortgage Loan Officer, Fairway Independent Mortgage Corporation NMLS #2289) almost 9 years ago

That is incredible progress - this also shows through our short sale closings increasing quickly also that lenders are a little more (operative keyword little) open minded on finding solutions.

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) almost 9 years ago

Esko, my husband met someone yesterday who modified his mortgage, so was able to keep his home. But it was a double edged sword for his business. His lender continued to count him late for the original "unpaid" portion which lowered his scores and credit limits, leaving no room to purchase his business inventory.

So he kept his home but his business is falling apart. The reporting lender should be held accountable.

But don't get me wrong. I am thrilled for some good news. Let's hope for more and more for today's homeowner and the housing industry.

Posted by Kate Kate almost 9 years ago


This is what we like to see, small steps forward.

Posted by Esko Kiuru almost 9 years ago


Re-default is a bleeding wound that needs extra attention.

Posted by Esko Kiuru almost 9 years ago


"Little" sums it up well, but at least they are moving in the right direction now.

Posted by Esko Kiuru almost 9 years ago


That is unfortunate that the modification allows the lender to report the unpaid balance as being late. The fine print can be detrimental to a good night's sleep.

Posted by Esko Kiuru almost 9 years ago