US Treasury puts performance of 10 larges HAMP servicers on display
The U.S. Treasury has releases its regular monthly report card on the Home Affordable Modification Program (HAMP). This time is an assessment of how the 10 larges HAMP servicers are performing.
Substantial Improvement was given to Bank of America, Ocwen Loan Servicing, Wells Fargo and JP Morgan Chase. Of those four, three – Bank of America, JPMorgan Chase and Wells Fargo – Treasury is withholding all future financial incentives until they make specific improvements. Should they fail to correct identified problems in a “reasonable time”, it may permanently reduce their financial incentives. As problems are remedied, incentive payments will resume.
Moderate Improvement was given to the remaining six servicers – American Home Mortgage Servicing, CitiMortgage, GMAC Mortgage, Litton Loan Servicing, OneWest, and Select Portfolio Servicing. These firms could have incentives withheld in the future if they fail to make certain improvements.
All withholdings apply only to incentives owed to servicers for their participation in the federal program. Incentives slated to go to homeowners or investors will still be paid through the servicer.
No servicer has been identified as needing only Minor Improvement.
Servicers are paid $1,000 for every permanent modification made under HAMP. “Pay for Success” incentives are then awarded to servicers annually for three years as long as the borrower stays current. HAMP participation is voluntary and Treasury doesn’t have the authority to impose fines like a regulator could, they’re using the tools they have to push servicers to take remedial actions when they are not in compliance with program guidelines.
According to the report, there are currently 608,000 permanent HAMP modifications in active status. Servicers converted 29,000 trial modifications to permanent during the month of April and started another 29,000 trial plans during the month. The average length of the trial period has been 3.5 months and 70% of those have been converted to permanent modifications.
The median payment reduction amount permanent modifications is 37%, or more than $500 a month, and they say re-defaults have been “lower than anyone expected.”
Excerpts from this article from DSnews.com by Carrie Bay 6/9/11
Information on the Obama administration’s foreclosure-avoidance program
Recently the House Financial Services Committee took a look at the performance of the Obama administration’s foreclosure-avoidance program in early October; here is what came out of that hearing and it doesn’t look good:
1) HAMP – designated to help as many as 4 million troubled homeowners modify the terms of their mortgage and obtain more affordable payments. The program has resulted in approximately 800,000 permanent modifications and 106,000 trial modifications still ongoing, according to Darius Kingsley, deputy chief of Treasury’s Homeownership Preservation office. These figures are far less than the original target.
2) Emergency Homeowner’s Loan Program – The Dodd-Frank financial reform law authorized $1 billion to provide bridge loans of up to $50,000 for homeowners who had experienced sudden drops in income because of employment or medical problems. As of Sept. 28, it has resulted in 12,000 completed transactions and is expected to use just $400-$500 million of the authorized $1 billion, according to acting FHA commissioner Carol Galante. The 12,000 funded cases were all that HUD could manage to approve out of 100,000 applications.
3) FHA Refinance Program, aka “Short Refi” This was designed to help as many as 1.5 million underwater owners refinance into affordable FHA loans, and was funded by $8 billion originally set aside for HAMP. As of the end of September, FHA and the program’s 27 participating lenders had completed just 334 refinancings according to the agency.
4) HARP – The administrations signature program for homeowners who have lost equity because of declining home prices but who nonetheless have stayed current on their payments. Only borrowers with loan-to-value ratios above 80 percent and no higher than 125 percent are eligible. Originally projected to help between 4-5 million homeowners, as of August it had resulted in 838,000 refinancings.
Tips when applying for Loan Modification
The following tips were given by Stephfan Nurse, CEO of Consumer Education, makers of mortgage reduction software designed to help people thru the modification process:
1) When faxing or sending in your paperwork to your lender, make sure that your loan number is printed on every page you are sending in. Lenders received thousands of papers a day and sometimes the cover sheet gets lost or the fax gets misplaced. If you have the loan number on every page, they can make sure it gets in your file.
2) Make sure that ALL of the requested paperwork is included in the file. If you are missing just one required document, they will show your account is incomplete and your file sometimes goes to the bottom of the pile.
3) Follow up every week with your lender to make sure all of the documents they have are up to date. Don’t worry about being a pest; this usually keeps your file moving along.
These tips are the same tips we use when submitting Short Sales. The complete packages move along much quicker then the packages submitted with missing documents. Some lenders even tell us to keep sending in pay stubs and bank statements so the file is kept current at all times.
Distressed Options for Homeowners in California
If you have found yourself falling behind in your mortgage and debt obligations, you aren’t alone. With the loss of jobs and declining home values and the current economy, homeowners like you are forced to consider options that were unthinkable a few years ago.
The US Department of Housing and Urban Development (HUD) has established a hotline to assist homeowners who are facing a hardship. You can contact HUD at their toll free number 1-877-483-1515 to find out what options are available to you:
2) Short Sale
3) Foreclosure
To learn more about the tax consequences of a short sale versus a foreclosure, you can visit the IRS web site at www.irs.gov. Before executing any of these options, consult with a certified public accountant or tax attorney.
Governor Schwarzenegger has instituted a statewide, 90-day halt on foreclosure proceedings for each owner-occupied home subject to a first mortgage on which a Notice of Default has already been file.
Fannie Mae and Freddie Mac Short Sales and Deeds-in-Lieu up 27% in 2nd Quarter
Nearly 31,000 borrowers with Fannie Mae (FNMA) and Freddie Mac (FMCC) loans forfeited their homes through a short sale or deed-in-lieu of foreclosure during the 2nd quarter of 2010. This is a 27% increase over the 24,000 transactions completed during the 1st quarter of 2010.
During the same period last year there were 11,700 transactions up from 3,000 the year before.
Federal Housing Finance Agency (FHFA) also reported that loan modification and refinancing by FNMA and FMCC were up in the second quarter. The Home Affordable Modification Program (HAMP) increased 65% while refinancing under the Home Affordable Refinance Program (HARP) increased by 30%. Loan servicers completed 171,200 permanent loan modifications on these types of loans thru HAMP and nearly 88,600 borrowers in HAMP trials transitioned to permanent modifications bringing the two companies HAMP numbers to nearly 225,000. FHFA’s report also stated that approximately 202,000 of the borrowers were in a HAMP trial period at the end of the 2nd quarter, compared to nearly 448,100 at the end of the first quarter. That means minus the 88,600 permanent modifications 157,500 homeowners’ HAMP trials were cancelled as a result of missed payments or inadequate documentation.
FHFA also noted that more than ½ of the modifications completed in the 2nd quarter lowered borrowers’ monthly payments by more then 30%. During this same period the two companies initiated 275,100 new foreclosures, an increase of 12%. Completed foreclosure sales and 3rd party sales totaled 112,400, up 15% from the previous quarter.
