Posts Tagged ‘permanent modifications’

Bank Of America Lagging Behind In HAMP Modifications

Recent data released by the government reveal that Bank of America, for all its touting as a loan modification leader,  is the least responsive to beleaguered homeowners in need of mortgage assistance.

The numbers show that Bank of America has offered only 24% of homeowners whose HAMP modifications were cancelled alternative modifications while the big eight servicers have offered 44.5 % of this group alternative modifications. Further, where trial modifications have been denied, the big eight have offered 33% of these folks alternative modifications while Bank of America has offered only 11% of this group alternative modifications.

As for HAMP modifications, fifty percent of Bank of America’s trial modifications are still ongoing after six months even though the government specifically has ordered the banks to either convert the trials to permanent modifications or cancel them in three months. Only 26% of all Bank of America’s trial modifications have been converted to permanent ones.

Bank of America talks a good game and releases its own figures just prior to the time when the government releases its numbers. While Bank of America does have the greatest number of permanent modifications, this figure is misleading since it has the largest number of eligible loans out of any other servicer.

HAMP Still Not Making The Grade: Geithner Refuses To Consider Alternatives

By almost every measure, the HAMP program continues to underperform in its effort to address the problem of mortgage foreclosures. Since its inception a year and half ago, only 340,000 homeowners have received permanent modifications and 436,000 have been dropped from the program. Last month alone, 155,000 homeowners were kicked out of trial modifications as opposed to only 30,000 who received new trial modifications. Accordingly, it appears the HAMP program is helping fewer and fewer homeowners as time goes on.

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New Enhancements To The HAMP Program Potentially Could Mean A Speedier Evaluation Process

In the past year and a bit since the inception of the Home Affordable Modification Program (HAMP), it has gone through a number of enhancements. The latest enhancements, which were announced back in January of this year, have now gone into effect as of June 1st.

Those enhancements detailed in Supplemental Directive 10-01, should help to speed up the process in evaluating borrowers for loan modifications and converting trial modifications to permanent ones.

One of  HAMP’s major obstacles has been  a poor conversion rate  from trial modifications to permanent ones.  Whether the servicers are to be believed and the fault lies with borrowers for not sending in the necessary income documentation, or it’s the servicers’ fault for losing that  paperwork,  the result  has been the same:  most trial modifications end up being denied or  are in limbo for months and months.  Under the new directive, servicers can only offer trial modifications based upon verified income:

Effective for all trial period plans with effective dates on or after June 1, 2010, a servicer may evaluate a borrower for HAMP only after the servicer receives the following documents, subsequently referred to as the “Initial Package”. The Initial Package includes:

  • Request for Modification and Affidavit (RMA) Form,
  • IRS Form 4506-T or 4506T-EZ, and
  • Evidence of Income

In other words, any trials offered will be based on income and other information already received by the servicer.   Conceivably, this means  that once a borrower is in a trial modification, barring any large change in the borrower’s income, that borrower should end up with a permanent HAMP modification if he makes all his payments on time.

The new directive also places some requirements for servicer communication with borrowers while under review for a HAMP mod:

Within 10 business days following receipt of an Initial Package, the servicer must acknowledge in writing the borrower’s request for HAMP participation by sending the borrower confirmation that the Initial Package was received, and a description of the servicer’s evaluation process and timeline.

and

Within 30 calendar days from the date an Initial Package is received, the servicer must review the documentation provided by the borrower for completeness. If the documentation is incomplete, the servicer must send the borrower an Incomplete Information Notice in accordance with the guidance set forth in the “Incomplete Information Notice” section below. If the borrower’s documentation is complete, the servicer must either:

  • Send the borrower a Trial Period Plan Notice; or
  • Make a determination that the borrower is not eligible for HAMP and communicate this determination to the borrower in accordance with the Borrower Notice guidance provided in Supplemental Directive 09-08.

Time will tell how well these enhancements to the program work. The major stumbling block to the success of the program remains its voluntary nature and the lack of enforcement ability to actually compel servicers to modify eligible loans and to cease foreclosures during the evaluation period.

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