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Private Loan Mods Outnumbering Govt. Mods

The Hope Now Alliance, "the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors," reported today:

January 2010 data estimates 99,499 homeowners received proprietary loan modifications for the month. Combined with the United States Treasury’s recently released Home Affordable Modification Program (HAMP) data that showed 50,364 HAMP modifications for January, the total number of loan modifications is almost 150,000 for the month.

Most significant in the data is the fact that 74% of proprietary loan modifications done in January involved reductions of principal and interest payments - more than 73,000 loans. Also, it should be noted that proprietary non-HAMP solutions outnumbered HAMP modifications almost two to one; further proof that the industry is looking at a breadth of solutions designed to keep families in their homes.

Just to be clear, proprietary loan modifications are those done outside of the government's $75 billion Home Affordable Modification Program. So those mods are being done at a rate of twice the HAMP mods.

Why?

I asked Faith Schwartz, Executive Director of the Hope Now Alliance.

"We know approximately 25 percent of foreclosures (on paper documented) are investor properties—Also note, for many loans, the occupancy may have become the issue, even if originally owner occupied. So, on paper they look like occupied but addresses are different and they no longer live there. So that would also translate to mods that fall outside of the Government programs—jumbo's, and then of course, the many mods that do not document properly to get government assistance. That is a big number."

The qualification standards for HAMP are high…can't be an investor, can't be a second home, can't be a jumbo loan, and more. The good news is that these loans are in fact being modified, some of them actually getting principal write downs, unlike the bulk of HAMP mods.

"I think we need to pay more attention to the fact that all the non-HAMP mods are NOT government subsidized, and that is also a good thing," adds Schwartz.

Questions? Comments? RealtyCheck@cnbc.com