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| Over 600,000 Will Miss Out On HAMP |
HAMP Spent Only 5.4% Of Its Budget:
$43.1 Billion Still Available For Borrowers
October 31, 2011
The Home Affordable Modification Program comes to an end on December 31, 2012. But there
is still about $43 billion left in the vault. There was $45.6 billion in TARP funds available to help
homeowners facing foreclosure. The Special Inspector General of the Troubled Assets Relief
Program (SIGTARP) estimates that there will be over 600,000 homeowners who will miss the
opportunity to save their homes.
The Treasury recently stated that there were 992,968 homeowners who were eligible for a loan
modification. There are about 30,000 modifications completed each month. So at this pace
360,000 homeowners would get a new permanent modification for their mortgage.
We have the money. We have eligible homeowners. So what is the problem? Why is HAMP
performing so poorly? Many experts from the mortgage finance community believe that the
problem lies in the loan servicing companies.
Servicers are slow in making decisions. They are putting their client the lender first. Many are
overwhelmed by the sheer volume of applications. They simply do not have the trained
personnel to handle thousands of homeowners and the mountain of paperwork that has to be
processed.
The Special Inspector General confirmed that the agency's hotline continues to receive calls
from frustrated homeowners. The complaints are centered around the servicers handling the
HAMP loans.
In the area of trial modifications, the time limit is lasts beyond the three months that is stated by
HAMP. In some cases many trial modifications fail to be converted to permanent modifications.
In addition, when homeowners complain to managers or supervisors, the complaints are not
addressed in a timely fashion.
One solution to the confusion would be to have the Treasury make it mandatory for a servicer to
inform the borrower in writing of any changes to the status of the application. This idea was put
forward by the Special Inspector General. The penalty for not complying is generally a
temporary withholding of incentive payments from servicers.
Of the 112 active servicers only a few have been penalized. Treasury has withheld HAMP funds
from Wells Fargo, JP Morgan Chase and Bank of America, because these lenders denied loan
modifications that should have been granted through a second review process. However, if JP
Morgan Chase and Bank of America make the necessary changes, the funds will be paid.
Meanwhile, Wells Fargo has made the changes and has received its money.
The government watchdog has asked Congress or Treasury to set specific benchmarks for all
servicers to meet, and to enforce the rules. For example, if a servicer takes three to four months
to convert a trial modification to a permanent, there is no penalty.
With just only 14 months remaining before HAMP expires, there is a lot of work to be done
$43.1 Billion Still Available For Borrowers
October 31, 2011
The Home Affordable Modification Program comes to an end on December 31, 2012. But there
is still about $43 billion left in the vault. There was $45.6 billion in TARP funds available to help
homeowners facing foreclosure. The Special Inspector General of the Troubled Assets Relief
Program (SIGTARP) estimates that there will be over 600,000 homeowners who will miss the
opportunity to save their homes.
The Treasury recently stated that there were 992,968 homeowners who were eligible for a loan
modification. There are about 30,000 modifications completed each month. So at this pace
360,000 homeowners would get a new permanent modification for their mortgage.
We have the money. We have eligible homeowners. So what is the problem? Why is HAMP
performing so poorly? Many experts from the mortgage finance community believe that the
problem lies in the loan servicing companies.
Servicers are slow in making decisions. They are putting their client the lender first. Many are
overwhelmed by the sheer volume of applications. They simply do not have the trained
personnel to handle thousands of homeowners and the mountain of paperwork that has to be
processed.
The Special Inspector General confirmed that the agency's hotline continues to receive calls
from frustrated homeowners. The complaints are centered around the servicers handling the
HAMP loans.
In the area of trial modifications, the time limit is lasts beyond the three months that is stated by
HAMP. In some cases many trial modifications fail to be converted to permanent modifications.
In addition, when homeowners complain to managers or supervisors, the complaints are not
addressed in a timely fashion.
One solution to the confusion would be to have the Treasury make it mandatory for a servicer to
inform the borrower in writing of any changes to the status of the application. This idea was put
forward by the Special Inspector General. The penalty for not complying is generally a
temporary withholding of incentive payments from servicers.
Of the 112 active servicers only a few have been penalized. Treasury has withheld HAMP funds
from Wells Fargo, JP Morgan Chase and Bank of America, because these lenders denied loan
modifications that should have been granted through a second review process. However, if JP
Morgan Chase and Bank of America make the necessary changes, the funds will be paid.
Meanwhile, Wells Fargo has made the changes and has received its money.
The government watchdog has asked Congress or Treasury to set specific benchmarks for all
servicers to meet, and to enforce the rules. For example, if a servicer takes three to four months
to convert a trial modification to a permanent, there is no penalty.
With just only 14 months remaining before HAMP expires, there is a lot of work to be done