Alert July 10, 2012

GAO Pushes Agencies to Increase Efficiency of Current Loan Mitigation Efforts Through Increased Data Collection and Analysis

The GAO issued a report on foreclosure mitigation, finding that while nearly 1 million loans have been modified under the Home Affordable Modification Program between 2009 and 2011, and an additional 3 million loans modified under servicer-specific loan modification programs, the number of loans in foreclosure or facing likely foreclosure remains high.  The report recommends that agencies collect and analyze additional data to determine the effectiveness of their modification programs, including HAMP, as well as the likelihood of success of other mitigation efforts.  For example, the GAO report notes that its data suggests principal forgiveness may be an effective foreclosure mitigation tool; however, because the FHFA has not reached a decision regarding whether the enterprises will engage in HAMP principal forgiveness modifications, the effectiveness of this tool is unknown.  The GAO urged the FHFA to expeditiously reach a decision before the December 2013 deadline to enter into a permanent HAMP-modified loan.