"How's that Loan Mod Going?"  More Than 520,000 Trial Loan Modifications Cancelled

Over 520,000 trial loan modifications have been cancelled, including the 90,000 this month of June 2010. Only 364,000 borrowers remain in active trial modifications.

More than 40 percent of the trial loan modifications started under HAMP, Home Affordable Modification Program, were cancelled as of the end of last month, but permanent modifications totaled nearly 400,000, according to the latest Treasury report.

Of the 1,282,912 trials started, 520,814 have been cancelled, 364,077 are active, 389,198 are permanent, and the remaining 8,823 were permanent but subsequently cancelled.

The most common causes of trial cancellations included missing documentation, trial plan default, and ineligibility due to debt-to-income ratios already being below 31 percent.

Most who were cancelled were put in an alternative modification.

Bank of America now leads all servicers with 72,232 permanent modifications, followed by Chase with 54,722 and Wells Fargo with 44,628.

However, smaller loan servicers have been converting a larger share of their eligible 60+ day delinquent borrowers, thanks in part to the use of verified documentation.

Performance of Permanent Modifications

Delinquency data included in the latest report revealed that 4.1 percent of the 126,527 loan modifications made permanent in the first quarter of 2010 were already 60+ days late.

Another 1.3 percent are 90+ days late.

The numbers are 5.4 percent and 1.5 percent for modifications completed in the fourth quarter of 2009, and 10.5 percent and 4.4 percent for the third quarter of 2009, respectively.

While it's too early to really tell, the re-default numbers look lower than those tied to other modification programs.

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