Saturday, May 29, 2010

New Neighborworks Congressional Report Problems (1). Old Data Includes Oregon Data; (2). $440 Milion in Funding, But Virtually NO HAMP Loan Mod Counseling Referrals.

The latest Congressional report on Neighborworks housing counseling activities was quietly issued on Friday May 28th.

In my experience Issuing a report the day before a long holiday weekend is generally not a good sign and I think the virtually NO counseling for HAMP loan modification referrals is the primary reason the report was issued the way it was (discussion about HAMP loan modifications is below).

One other problem in the report is that it stops with counseling activity as of January 31, 2010, so the NEWEST data in the report is now 4 months old.

The official reporting website for Neighborworks congressional reports is HERE. I have downloaded the just issued May 28th Congressional report and added Oregon bookmarks; you can find my annotated copy of that report HERE

With $440 Million in Counseling Funding to Date, Neighborworks Counseling for HAMP Loan Modification Referrals Was Virtually Non Existent.
As of January 31,the report shows that Neighborworks counseling played virtually no official role in securing HAMP modifications with only 2,265 referrals to counseling. This compares to a national inventory of 839,438 trial HAMP loan modifications and 116,297 permanent HAMP loan modifications as of January 31st. (See my prior post HERE with Oregon and national HAMP totals by month). 

With so little HAMP Neighborworks referral activity there are NO state breakouts of the 2,265 national total in the Congressional Report, but if Oregon had 1% of the national total that would be 23 official HAMP counseling referrals in Oregon compared to an inventory of 9,416 trial and 1,469 permanent HAMP loan mods as of Jan 31.

I am sure that counseling agencies are frustrated by the limited role they have been able to play in HAMP modifications because of difficulties working with lenders and servicers; the explanation from the report provides some additional background:
Homeowners who receive trial loan modifications from their servicer but have a back end debt to income ratio at or above 55% must agree to meet with a counselor from a HUD-approved housing counseling
agency or NFMC Program participating agency. Accordingly, a new level of counseling – “Level Four” –was created under the NFMC Program to ensure homeowners have access to the servicers. It is valued at $450.

It is anticipated that up to four million homeowners will be eligible for assistance through the Making Home Affordable modification program, and that of these homeowners, roughly 240,000 to 320,000 will be referred to counseling with a back end debt to income ratio at or above 55%. The Making Home Affordable program did not include funding for these services, but NeighborWorks modified the NFMC Program rules to permit all Grantees working in any round of the NFMC Program to use up to 30% of their funding to support their Level Four activities.

As of January 31, 2010, 2,265 homeowners have been referred to NFMC Program counselors through this process. This is lower than projected, with counselors reporting that servicer referrals are not occurring. As the conversion campaign continues, and with improvements to the Making Home Affordable program becoming effective in June 2010, the NFMC Program will have more data to report on clients receiving this counseling in subsequent Congressional updates.

NeighborWorks America has been an active participant in the piloting and roll-out of HOPE LoanPort, a web-based utility that allows housing counselors to submit complete modification packages to participating mortgage servicers. This application is a unique convergence of and housing counselors and mortgage servicers, investors, and insurers. Through standardization and transparency in the process of applying for modifications, Hope LoanPort is expected to shorten timelines for decision-making and greatly reduce
uncertainty surrounding application statuses and reasons for denial

Oregon Data: 
I have extracted some Oregon data from the report and pasted it below, along with comparisons to US data (My annotated copy of the report has bookmarks that will take you to pages that contain data for all states for each measure shown).

You can see, compared to the US, that the 7,153 Oregon counseled families
  • Had a HIGHER percentage of families reporting a loss of income as the primary reason for default,OR were current on their mortgage, OR were paying 75% or more of their income towards PITI.
  • Had a LOWER percentage families that had interest rates higher than 8%, OR were 120 or more days late on their payment, OR  were paying LESS than 30% of their income for PITI.

Measure Oregon US Oregon % Higher or Lower than US
Loss or Reduction of Income as Primary Reason for Default 72% 57% 26%
% of Clients With Interest Rates at 8% and Above 18.59% 25.74% -28%
% of Clients 120 or more days late 15.95% 21.21% -25%
% of Clients That Were Current on Mortgage 40.78% 34.64% 18%
Clients Paying 75% of more of income for PITI 20.37% 17.13% 19%
Clients Paying 30% or less of income for PITI 20.60% 34.02% -39%
Clients with Income Below 80% of Median Family Income 62.04% 65.03% -5%
Clients with Income Below 50% of Median Family Income 31.94% 30.33% 5%

Originally created and posted on the Oregon Housing Blog.

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