Performance of HAMP Versus Non-HAMP Loan Modifications – Evidence from New York City

Abstract

Policymakers are relying heavily on mortgage modifications to address the foreclosure crisis. However, not enough is known about whether modifications actually help borrowers stay current over the long run, or about what kinds of modifications are most successful. We use logit models in a hazard framework to explain how loan, borrower, property, servicer and neighborhood characteristics, along with differences in the modifications, affect the likelihood of redefault. The dataset includes both HAMP and proprietary modifications. Our results demonstrate that borrowers who receive HAMP modifications have been considerably more successful in staying current than those who receive non-HAMP modifications.

Keywords: Mortgage, Modification, Default, Foreclosure, HAMP, New York City

JEL Classification: G21, G38, L85, R31, R38