Wednesday, July 29, 2009

Banks Asked to Ramp Up Loan Help

U.S. Wants 500,000 Mortgage Modifications by Nov. 1; Firms Ask for Clarity
July 29, 2009 - by Renae Merle - Washington Post Staff Writer

Senior administration officials pressed executives from the nation's largest banks Tuesday to speed help to distressed borrowers after a frustrating start to the government's foreclosure-prevention effort and set a goal of more than doubling the number of homeowners receiving aid by November.

After a series of meetings with top banking executives, Treasury Department officials said they want lenders to modify 500,0000 mortgages by Nov. 1. Since the program, known as Making Home Affordable, began in March, it has recorded about 200,000 loan modifications. Read more ...

Related articles
Treasury Says Servicers Commit To Increased Loan Mod, July 28, 2009, Forbes
Mortgage Servicers Pledge to Accelerate Modifications, July 28, 2009, Bloomberg
Servicers Attend Meeting of the Minds in Washington, July 28, 2009, Housingwire
Administration pushes servicers to modify more mortgages, July 29, 2008, Seattle Post Intelligencer

Tuesday, July 28, 2009

Unintended consequence of mortgage modifications: falling credit scores

July 26, 2009 - by Alexis Leondis - Bloomberg News

NEW YORK — Victor Stern thought his money troubles were over when he got approval to modify his home loan.

Then his credit score dropped 121 points.

Stern, a business development director at an information technology company in Charlotte, N.C., said he was shocked to see his credit score drop to 619 from 740 after entering the trial period for a loan adjustment under President Barack Obama's Home Affordable Modification Program. A salary reduction caused him to seek a change in the terms of his loan before he missed any payments.

Mortgage lenders, including banks such as Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., report loan modifications to credit bureaus. The adjustments can lower credit scores because of the way the FICO formula, the most widely used by U.S. lenders, works. Read more ...

Foreclosures Are Often In Lenders' Best Interest

July 28, 2009, by Renae Merle, Washington Post Staff Writer

Government initiatives to stem the country's mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements, some economists have concluded.

Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable. Read more ...

U.S. Effort to Modify Mortgages Falters

July 28, 2009 - By Ruth Simon - The Wall Street Journal

An Obama administration effort to reduce home foreclosures by lowering the mortgage payments of struggling borrowers before they fall behind is failing to help as many people as expected.

Among the problems: Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.

Administration officials have summoned executives of 25 mortgage-servicing companies to Washington on Tuesday to discuss efforts to help borrowers, both delinquent and at risk. Among the items on the table: what steps the companies should take to increase and speed up modifications. Read more ...

Friday, July 24, 2009

New GAO report: Home Affordable program needs to be more transparent, accountable

The U.S Government Accountability Office released a report yesterday calling on the Treasury to make the administration’s Home Affordable Modification Program (HAMP) more transparent and accountable. The 68-page report is the sixth in a series of reports issued by the GAO analyzing the effectiveness of the Troubled Asset Relief Program (TARP). The report includes the following recommendations:

  1. consider methods for monitoring compliance with and the effectiveness of its counseling requirement;
  2. reevaluate the basis and design for Home Price Decline Protection (HPDP) program;
  3. regularly update assumptions and projections underlying the estimated number of borrowers likely to be helped by HAMP;
  4. staff vacant positions within the Homeownership Preservation Office (HPO), and evaluate its staffing levels and competencies;
  5. finalize a comprehensive system of internal control over HAMP; and
  6. systematically assess servicer’s capacity to meet HAMP’s requirements during program admission.

The full report is available here.

Saturday, July 18, 2009

Obama turns up heat on mortgage servicers

Administration will tell financial institutions they must do more to help borrowers. 'We think we can do even more,' official says.

July 16, 2009 - by Tami Luhby CNNMoney.com

NEW YORK -- As complaints mount about President Obama's foreclosure prevention program, the administration is ratcheting up the pressure on mortgage servicers.
Financial executives will meet with Treasury Department and administration housing officials on July 28 to discuss how the loan modification and refinancing plan has been implemented. The administration plans to grill servicers that have done few modifications or have had many complaints.

Officials also want financial institutions to hire more people and train them better, expand their call centers, and send more mailings to eligible borrowers, according to a letter sent to servicers last week. The government also said servicers need to establish a way for borrowers to contest their treatment or denial. more ...

Senate Banking Committee Focuses On HAMP

July 17, 2009 - by John Clapp - Mortgage Orb

As a precursor to the July 28 meeting scheduled between Treasury officials and servicers participating in the government's Home Affordable Modification Program (HAMP), the Senate Banking Committee held a hearing Thursday morning in an effort to help lawmakers gauge HAMP’s progress - or lack thereof - since its introduction in February.

The hearing - which included testimonies from the Treasury, as well as Wells Fargo and Bank of America servicing execs - highlighted the program’s administrative obstacles and shortcomings. In recent weeks, lawmakers have increasingly expressed concern that HAMP, originally projected to save up to 4 million homes, is both underperforming and being implemented too slowly.

“We've got to get this out sooner, quicker, faster, more expeditiously,” said Sen. Mark Warner, D-Va. more ...