FOR IMMEDIATE RELEASE                                             CONTACT: Julie Wood

May 17, 2010                                                                          Office: 212-260-8813 ext.247

                                                                                                Cell: 917-282-5840

STATEMENT FROM THE ASSOCIATION OF MORTGAGE INVESTORS IN RESPONSE TO APRIL HOME AFFORDABLE MODIFICATION PROGRAM REPORT

Today the Association of Mortgage Investors released the following statement in response to Treasury’s release of the April HAMP report:

“Today’s report serves to highlight the reasons that the HAMP program is an incomplete answer to the foreclosure crisis. A closer look at the report shows several areas that indicate the need for a more comprehensive solution that addresses the root causes of homeowner distress:

·         In the April report, the median back-end debt-to-income ratio was 64.3 percent, up from 61.3 percent in March. This means that modified homeowners are still saddled with enormous debt loads outside of their first mortgage (auto, credit card, second liens), indicating that the ultimate problems are just being pushed into the future when homeowners default again.

·         The report does not specifically state how many modifications (trial and permanent) have redefaulted.  This is critical information in determining the success of the program.

·         The program still appears to focus on only a fraction of delinquent homeowners: 1.7 million out of 6 million total delinquent homeowners are eligible for HAMP.

·         The report does not include how many delinquent homeowners – the universe of potential HAMP modifications – have been reviewed by servicers.  This is critical information for monitoring servicers’ progress and quantifying how many additional modifications are possible under this program.

·         The report shows that the number of homeowners who have failed a trial modification (277,640) is nearly as large as the number of active permanent modifications (295,348).

Given those issues, AMI supports shifting away from a short-term modification plan and toward a principal reduction/refinancing plan that has first and second liens participating in a program that will help the homeowner afford their mortgage and help rebuild equity – with the end goal of keeping them in the home. This involves reducing mortgage principal balances on the first lien mortgage as well as other subordinate liens, including second liens, and refinancing the homeowner into a new permanent mortgage.  In some situations, all of the homeowner’s debts will need to be reduced to ensure that their total debt-to-income ratio is sustainable. Without addressing the root causes of default and providing real relief to the country’s 6 million troubled homeowners, the housing market will continue to be plagued by defaults and redefaults. Before a true economic recovery can take place, we must get the housing market back on the right track.”

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