October 23rd, 2010

Despise HAMP? Your servicer does too

by Gina Pogol


Below is an excerpt from HSH.com’s original article “Why both mortgage servicers and borrowers hate HAMP“:

Homeowners and government watchdogs agree: The much-vaunted Home Affordable Modification Program (HAMP) has so far been a failure. Likewise, the mortgage servicing companies charged with implementing the program aren’t too happy with it either. But do servicers’ complaints have merit? Or are they improperly and deliberately denying HAMP claims?

When the country’s largest mortgage servicers testified before the House of Representatives in June about the HAMP program and the results they have achieved thus far, they explained that the disappointing performance of the program is the result of its complexity, many changes and borrower failure to provide needed information or make their trial payments on time.

How many loan mods?

Of the millions who have applied for HAMP in the 15 months the program has been up and running, less than 400,000 have received permanent loan modifications — a far cry from the three million to four million people the Treasury Department projected would be helped by the program.

Wells Fargo co-president Michael J. Heid said that many borrowers expecting a mortgage modification ultimately didn’t qualify. He added that a lack of income documentation and failure to make all of the trial modification payments were the primary reasons some borrowers failed to receive a permanent modification.

He indicated that the program’s ongoing evolution makes it hard for mortgage servicers to catch up. “This has contributed to a level of complexity that has been difficult for customers to understand and for servicers to communicate and execute,” he said.

Treasury officials added that only one in 10 borrowers kicked out of HAMP heads into foreclosure. About half are offered relief from other lender interventions. However, it’s unclear how helpful those proprietary loan modifications are, or how they will perform in the long run. While permanent modifications give borrowers an average savings of $510 per month, the government does not track what sort of savings borrowers can expect from non-HAMP modifications, and critics say servicers push desperate borrowers into packages that aren’t in their best interest, in many cases increasing their payment to repay arrearages.

Loan modification hell

While some homeowners may have failed to qualify for a modification for the reasons indicated by Heid, many others have come forward with remarkably similar stories: lost paperwork, requests to fax the same documentation over and over, speaking with a different mortgage modification specialist every time, and a perceived sense of both indifference and incompetence on the part of the servicer.

Ultimately, most faced denials for HAMP and demands for immediate payment even when they met every qualification listed on MakingHomeAffordable.gov. The frustration and heartache of mortgage customers has been extensively documented on sites like ConsumerAffairs.com…

CLICK HERE to continue reading “Why both mortgage servicers and borrowers hate HAMP.”

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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