Federal Home Affordable Modification Program (HAMP) data released Monday show 295,348 active permanent loan modifications through the end of April. Almost 68,000 of the permanent modifications converted from ‘trial’ status during the month, representing a nearly 13% increase over the number of loans that were converted the prior month.
‘The number of homeowners receiving significant relief through a mortgage modification continues to rise,’ says Phyllis Caldwell, chief of the U.S. Treasury Department's Homeownership Preservation Office. ‘Our focus now is on improving the homeowner experience and holding servicers accountable for their performance. Increased transparency through more robust reporting of servicer-specific data will contribute handily to those efforts.’
New in this month's report is information about servicer-specific conversion rates to permanent modifications and servicer performance in giving homeowners timely decisions. The data show that there is wide variation among servicers in these areas, which the Treasury says further demonstrates the need for transparency regarding servicer performance.
Under initial HAMP guidance, servicers were allowed to – though they were not required to – offer trial modifications based on borrowers' stated income levels. The Treasury revised HAMP's income documentation guidelines earlier this year, and effective June 1, servicers must collect income documentation prior to offering new trial modifications. Many servicers began collecting up-front documentation from borrowers in March.
Ocwen Financial Corp. and HomEq Servicing, two shops that used verified income documentation, experienced conversion rates of 83%. Carrington Mortgage Services LLC, also a verified-income HAMP servicer, boasted a conversion rate of 74%.
By comparison, Select Portfolio Servicing and Nationstar Mortgage LLC recorded the best conversion rates among stated-income shops, at 43% and 40%, respectively.
Using stated-income upon trial starts, the four largest participating servicers have conversion rates below 30%.
The Treasury also released for the first time data on servicers' aged trial modification inventories (i.e., the percentage of a shop's active trial modifications that had been initiated at least six months earlier). Saxon Mortgage Services had the highest share of aged trials, with 76% of its active trial modifications having been started at least six months earlier. Chase had the second-highest percentage, at 72%, while U.S. Bank's 58% was the third highest.
Last week, as part of a continued effort to improve servicer performance, the Obama administration hosted a summit with representatives from participating mortgage servicing companies to discuss ways to move qualified homeowners into permanent modifications, improve homeowners' HAMP experience, quickly implement the Second Lien Modification Program and Home Affordable Foreclosure Alternatives, and maintain the pace of new trial modification starts.
The administration also outlined for servicers its plans to begin reporting more detailed performance measures. By July, this reporting will include the eight largest servicers and will focus on servicer compliance, program execution and homeowner experience.
Compliance reporting will include results of servicer-level loan-file reviews assessing whether loan files were appropriately evaluated and the identification of all compliance activities performed for servicers and a summary of areas identified for future compliance focus.
Program execution reporting will include statistics such as servicer implementation timelines for program updates and the length of time it takes a servicer to process a loan from initial trial through permanent modification.
The Treasury will also report on the eight servicers' handling of calls from homeowners (measured by speed-to-answer and hang-up rates) and the time it takes a servicer to resolve homeowner problems that have been reported by third parties (e.g., housing counselors, attorneys, government offices).
SOURCE: U.S. Treasury Department