If you ask a borrower “who is to blame for your HAMP denial?” They’ll likely say the servicer. If you ask the servicer, chances are they’ll say it’s the borrower’s fault. Wherever the proper blame lies, a few things are for certain: the foreclosure epidemic is steady if not rising, and failed modifications are still outnumbering permanent mods.

But as the Treasury Department reiterated this month, it’s the participating servicers who are the ones with the obligation to the borrower. If a borrower doesn’t provide the proper paperwork, then their denial is their own fault; however, “participating servicers are required to certify they tried a variety of solutions including a HAMP modification, a proprietary one, a short sale or some other option to help borrowers avoid foreclosure,” according to National Mortgage News: Read the rest of this entry »

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?

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Last week I wrote about how one Treasury spokeswoman said that modifications outside of the home affordable modification program (HAMP) were so successful because of all the “tools” making home affordable has made available to servicers. That is, the government’s efforts have spurred private markets to respond with their own, more successful programs.

Ed Pinto, the former chief credit officer of Fannie Mae, testified in late June before the House Oversight Committee, saying that “HAMP reversed the upward trend in the numbers of [private sector] modifications and hopelessly tied the modification process up in knots.”

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Here’s a common scenario nowadays: You’re out of work and you know that you’re going to have trouble making your future mortgage payments on time. If you’re “lucky enough,” writes Gail MarksJarvis of the Chicago Tribune, to have your lender approve you for a loan modification, the last thing you need is for your credit score to drop as a result. Unfortunately that has happened to thousands of homeowners.

The good news is that a bill was introduced this week to protect borrowers’ credit scores from falling once their loan mod is approved: Read the rest of this entry »

A while back one of our dedicated readers told me she couldn’t understand why the mortgage industry wasn’t doing more to persuade borrowers from strategically defaulting (when a borrowers who can afford their monthly payments defaults on purpose). As of yesterday, the biggest player in the American mortgage market took action.

Fannie Mae announced that they plan to “lockout” borrowers for seven years who have strategically defaulted — a.k.a “walked away” — from their mortgage: Read the rest of this entry »

Number of permanent loan modifications: 299,000.

Number of trial modifications canceled:  278,000.

Number of “active trials”: 637,353.

Number of trial modifications started over the last seven months: 660,000.

“That suggests that the HAMP trial period is about 7 months!” writes Calculated Risk (CR), a financial blog. CR’s observation does seem to coincide with the feedback we’ve received from some readers of this blog: the trial portion of the loan mod process is taking far longer than the three-month period it’s designed to last; and more often than not, borrowers aren’t surviving this trial stage.

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If you enjoy the topics we cover on the blog each week, make sure you check in with HSH.com to read the new feature articles that we publish each and every week.

Here are the newest articles appearing on HSH.com:

Refinancing: Read the rest of this entry »

Just yesterday we asked readers if principal reductions were a strategy that could improve the Federal loan mod effort. Given that the Treasury just announced new wrinkles to the HAMP today — including a provision that pays incentives to lenders who reduce a borrower’s principal — their answer seems to be “yes.” The Treasury’s new plans for HAMP focus its support mainly on both underwater and unemployed borrowers.

As the housing crisis and the solutions to solve it have evolved over the last few years, it has become evident that both underwater and unemployed borrowers continued to be under-served. The administration is hoping that the strategies announced today will finally address the challenges facing these borrowers.

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The mere suggestion of this concept is bound to envelope two schools of thought, two sets of strictly-opposing opinions. While some readers may interpret principal reductions as a glimmer of hope that’s long overdue — a solution that may keep some from failing on their mortgage — others are bound to gnash their teeth in disfavor, another home-retention strategy that only serves to soften the consequences of falling behind on your mortgage.

Principal Reduction — when a lender or a servicer reduces the total amount that you owe on your home loan — has long been viewed as a modification strategy of last resort. However, due to the ongoing failure of the home affordable modification program (HAMP) — with its minimal permanent mods, high re-default rates, etc. — and the ongoing issues of falling home prices and rising foreclosures, the chatter that’s calling for principal reductions (especially in the hardest-hit housing markets) has become louder. That being said, there’s another group who wants to avoid the use of principal reductions like the plague, since they are viewed as a reward for failure.

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Update1: While many industry insiders have debated the success of the home affordable refinance program (HARP) — in fact, analysts at Barclays Capital referred to the program as a “failure” last week — one thing’s for sure, HARP will be extended another year. The expiration date is now slated for June 30, 2011.

According to the National Association of Realtors, “Since HARP began last April, it has refinanced 190,180 mortgages.” That’s a far cry from helping the 4-5 million homeowners that the program originally promised.

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