First Monthly Servicer Report Released. Administration Wants More Agressive Action
Claiming to have made rapid progress in its few short months of operation, the Treasury Department has released its first monthly Servicer Performance Report detailing the progress of the Making Home Affordable (MHA) loan modification program.
Under the program, which was authorized by President Barack Obama on February 18, MHA has contracted with mortgage servicers to offer sustainable loan modifications to borrowers who are delinquent on their mortgage loans. $75 billion is authorized for the program.
MHA reports that the 38 servicers which have signed agreements to participate in the program represent 85 percent of the country’s mortgage loans.
Requests for financial information, the first step in the process, have been sent to almost 1.4 million borrowers and loan modification offers have been extended to 400,000. More than 230,000 trial modifications have begun and 100 percent of these have resulted in reduced monthly payments to borrowers. In 2008, before HMA, loan modifications completed by the nation’s largest services resulted in lower payments in only 42 percent of the cases. The current pace of modifications puts the program on track to hit its target of assisting three to four million homeowners in the next three years.
The report states, however, that servicer performance has been uneven. Among servicers enrollment in a trial modification ranges from zero to 25 percent of eligible borrowers. Many of the best performers are small servicers with only a few delinquent loans but J.P. Morgan Chase with 395,000 eligible loans (delinquent 60 days or more) and Saxon Mortgage Services with 84,000 both have over 20 percent of those loans enrolled in trial modifications and CitiMortgage has 15 percent of its 185,000 non-performing loans enrolled. Bank of America, however, has only a 4 percent participation rate among its 800,000 delinquent loans and Wells Fargo has enrolled 6 percent of 330,000 possible participants.
The Obama Administration has asked servicers to achieve a cumulative half-million trial modifications by November 1, more than doubling in three months the numbers achieved in the first five months of the program. In addition, Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan have written to the CEOs of participating servicers requesting they redouble their efforts to increase staffing, improve borrower response times, and streamline their application process. The Administration has also asked Freddie Mac, which serves as the program’s compliance agent to develop a process to audit MHA applications that have been declined by servicers.
To promote transparency, the Treasury Department will be issuing the MHA report on a monthly basis and plans to develop more exacting metrics to measure the quality of borrower experience with the program including wait time for information, completeness and accuracy of information, and response time on completed applications.
A list of participating servicers and their modification activity to date can be accessed through the following link: Making Home Affordable Program Report
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