Posted on Thursday, June 30, 2011
The U.S. Treasury has released its regular monthly report card on the Home Affordable Modification Program (HAMP). New this time is an assessment of how the 10 largest HAMP servicers are performing.
Four servicers have been designated as needing “substantial” improvement: Bank of America, JPMorgan Chase, Ocwen Loan Servicing, and Wells Fargo.
For three of these – BofA, JPMorgan, and Wells – Treasury is withholding all future financial incentives until they make specific improvements. Should they fail to correct identified problems in a “reasonable time,” Treasury says it may permanently reduce their financial incentives. As problems are remedied, incentive payments will resume.
Treasury will not withhold servicer incentives owed to Ocwen because officials say Ocwen’s compliance results were “substantially and negatively affected” by its acquisition of HomEq Servicing just before the compliance testing period, which covered part of the fourth quarter of last year and the first quarter of this year.
“Treasury will withhold servicer incentives from Ocwen if future compliance results do not indicate improvements,” according to the department’s report.
The remaining six of the largest servicers have been tagged as needing “moderate” improvement: American Home Mortgage Servicing, CitiMortgage, GMAC Mortgage, Litton Loan Servicing, OneWest, and Select Portfolio Servicing.
These firms could have incentives withheld in the future if they fail to make certain improvements, Treasury explained.
All withholdings apply only to incentives owed to servicers for their participation in the federal program. Incentives slated to go to homeowners or investors will still be paid through the servicer.
No servicer has been identified as needing only “minor” improvement.
According to Treasury’s report, there are currently 608,000 permanent HAMP modifications in active status.
Servicers converted 29,000 trial mods to permanent during the month of April and started another 29,000 trial plans during the month.
Treasury notes that of trial modifications started since June 2010, the average length of the trial period has been 3.5 months and 70 percent of those have been converted to permanent modifications.
The median payment reduction among permanent mods is 37 percent, or more than $500 a month, and Tim Massad, assistant Treasury secretary, says re-defaults have been “lower than anyone expected.”
Treasury says it plans to issue program assessments of the top 10 servicers on a quarterly basis.
By: Carrie Bay DS NEWS