HAMP Servicers, Administration Officials Meet In Washington

als from the Treasury Department and the U.S. Department of Housing and Urban Development (HUD) met with top executives from 25 servicers Tuesday to discuss ways of improving the federal government's Home Affordable Modification Program (HAMP), which lawmakers say is underperforming. The meeting – led by Treasury Assistant Secretary for Financial Institutions Michael S. Barr, Treasury Assistant Secretary for Financial Stability Herb Allison, Federal Housing Administration Commissioner David Stevens and HUD Senior Advisor to the Secretary William Apgar – established a goal of reaching 500,000 trial modifications begun by Nov. 1. According to Treasury Secretary Tim Geithner, more than 200,000 trial modifications are under way. The program is "on track to meet our goals," Geithner said in a Treasury statement. "Still, too many homeowners are at risk of foreclosure right now. Today's meeting was an opportunity to identify ways to accelerate the program and bring relief faster." During the meeting, administration officials detailed three steps that they say will improve the programs performance. First, the Treasury will begin publicly reporting results on a servicer-by-servicer basis beginning Aug. 4. The reports will include the number of trial modification offers each servicer has extended to eligible borrowers, the number of trial plans that are under way, the number of final modifications and, eventually, the long-term success of those modifications. The second step outlined by officials will be to work with servicers to set operational metrics to measure HAMP's performance. Metrics will include average borrower wait time for inbound calls, the completeness and accuracy of information provided to applicants, document handling and response time for completed applications. Third, in order to minimize the likelihood that borrower applications are overlooked or that applicants are inadvertently denied a modification, the administration has also asked Freddie Mac to develop a "second look" process pursuant to which Freddie Mac will audit a sample of modification applications that have been declined. Freddie Mac will coordinate with servicers to address specific cases that arise and to address general operational weaknesses where errors prove more systematic, the Treasuy statement says. Bank of American Home Mortgage President Barbara Desoer told the [link=http://online.wsj.com/article/SB124882959117688773.html][u]Wall Street Journal[/u][/link] that the meeting had a "sense of urgency." Two weeks ago, a Senate Banking Committee hearing examined current federal foreclosure prevention efforts. During the hearing, lawmakers aggressively questioned Allison and Apgar, as well as servicers, as to why modifications are still trailing foreclosures. According to the Center for Responsible Lending (CRL), nearly 500,000 loan modifications (including non-HAMP modifications) were completed in the first quarter of the year, but foreclosure starts and serious delinquencies during that period edged up to nearly 3.5 million. ‘Continuing this same course would be disastrous,’ said Mike Calhoun, president of CRL, in a statement. ‘The challenge of closing the gap between the foreclosure epidemic and foreclosure prevention represents a major public-policy issue that will affect all Americans.’ A coalition of major subprime servicers, meanwhile, says the program places a large financial burden on servicers, who are expected to forward advances to investors. While HAMP does pay incentives to servicers for each successful loan modification, the costs of extending workout negotiations constrain servicers' liquidity, Carrington Capital Management LLC CEO Bruce Rose told Reuters. Carrington Capital Management subsidiary Carrington Mortgage Services, a HAMP participant, leads the Independent Mortgage Servicers Coalition. Other servicers in the group include Ocwen Financial Corp. and Nationstar Mortgage, a Fortress Investment Group company. ‘We are in a position where it's a very tough balance act, and that's weighing heavily on us now,’ Rose told [link=http://www.reuters.com/article/businessNews/idUSTRE56R6UH20090728][u]Reuters[/u][/link] Monday. ‘This is a classic case of an unfunded government mandate.’ In a joint statement, the Mortgage Bankers Association, the Financial Services Roundtable and the Housing Policy Council said they believe the 500,000 trial modification goal is attainable. "The administration's loan modification program can be a valuable tool to help homeowners," the statement said. "The program requirements for both consumers and servicers may limit the number of borrowers eligible for the program. Together with HUD and Treasury, servicers are looking at ways in which we can simplify requirements and implement new technologies that will help streamline the process of aiding consumers." SOURCES: FinancialStability.gov, Reuters, Wall Street


Please enter your comment!
Please enter your name here