Making Home Affordable Program - Government puts hold on payments to three mortgage loan servicers

MHA Program Report- Modification Activity by State -

(Best Syndication News) - The Obama Administration announced today in a statement that they would start holding back incentive payments for three servicers; Bank of America, NA, J.P Morgan Chase Bank, N.A., and Wells Fargo Bank. N.A. The US Treasury said that these three and one other mortgage loan servicer need to show dramatic improvements within the Making Home Affordable Program.

The US Department of Treasury said that Bank of America, J.P. Morgan Chase, Ocwen Loan Servicing, and Wells Fargo are identified as needing substantial improvements to achieve the guidelines set forth by the government agencies in order to better help homeowners modify home loans. The Ocwen Loan Servicing servicer is not having their payments withheld because they had recently acquired a large servicing portfolio acquired that negatively affected the government's assessment.

JP Morgan Chase was behind on converting their trial modifications to permanent modifications. The government program wants the loan servicer to complete the trial modification between three and four months. Trial loan modifications started before June 1, 2010, took JP Morgan Chase an average of eight months to make permanent. Trial modification made after June 1, 2010 by JP Morgan Chase was improved to an average of 4.8 months. They were not alone with being slow prior to June 1, 2010, other servicers were slow at converting to a permanent modification. However, JP Morgan Chase was the slowest of the ten participants in the government report before and after the June 1, 2010 date.

Bank of America had the poorest conversion rate from a trial loan modification to a permanent one. Before June 1, 2010, Bank of America had a little over 30 percent conversion to a permanent modification. After June 1, 2010, they did improve to a 51 percent conversion rate. However, they still lag behind on permanent modification conversion rate from the other nine involved in the survey. JP Morgan Chase had a 59 percent conversion to permanent loan modification after June 1, 2010, which was the second poorest conversion rate for that period.

This is the first time that the US Treasury is withholding payment for non-compliance with the Making Home Affordable Program. The Obama Administration wants to see loan servicers better assist struggling homeowners if they want to continue to participate in the Making Home Affordable Program. The Treasury Department warned that they will “permanently reduce financial incentives” for servicers that fail to correct the problems within an acceptable period.

There were six identified as being in need of moderate improvements and the government agency warns that they too could be “subject to withholding” at a later date if they do not make necessary improvements.

The withholding is only for incentives given to the servicers as a participant in the Making Home Affordable Program. The payments for the benefit of homeowners or investors will not be withheld to the servicer.

The US Treasury has released the latest Making Home Affordable Program report with a new Servicers Assessment included in it. The servicer assessment covers the 10 largest program participants.

California, Florida, and Illinois had over 35,001 trials and active permanent mortgage loan modification up through April 2011. California metropolitan areas of Los Angeles, Long Beach, and Santa Ana had a combined 52,331 trial and active permanent loan modifications.

In the month of April there was almost 29,000 new permanent modifications reported. At the same time there was over 29,000 new trial modifications in April. The average homeowner savings from undergoing a loan modification was a median amount of $526.06 per month.

By: John Waters



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