May 18, 2010
The government's Making Home Affordable Prorgram has modified only 300,000 troubled mortgages since it began, a small fraction of the estimated 1.7 million homeowners the government thinks should be eligible.
As many as four million mortgages may be in danger of default.
According to a data released by the Department of Treasury and Department of Housing and Urban Development, the program modified 68,000 mortgages in March.
Despite the fact that there has been little let-up in foreclosures, there were fewer homeowners beginning trial modifications in April, according to the report. The numbers show the new applicants total fell by more than 30 percent from the number that signed up last September.
New in this month's report is information about servicer-specific conversion rates to permanent modifications and servicer performance in giving homeowners timely decisions. The data show that there is wide variation among servicers in these areas, further demonstrating the need for transparency regarding servicer performance, officials said.
"The number of homeowners receiving significant relief through a mortgage modification continues to rise," said Chief of Treasury's Homeownership Preservation Office (HPO) Phyllis Caldwell. "Our focus now is on improving the homeowner experience and holding servicers accountable for their performance. Increased transparency through more robust reporting of servicer-specific data will contribute handily to those efforts."
Similar complaints
Homeowners have long complained about their dealings with loan servicers while trying to obtain a mortgage modification. A common complaint is lost documents, repeated requests for the same documents, and a general lack of interest. The experience of Michael, of Cleveland, Ohio, in his dealings with Litton Loans, is not untypical.
"I began the mortgage loan modification process through U.S. Debt Relief Services in June 2009. In Jan 2010 I was told that I was approved and given a new monthly payment amount," Michael told ConsumerAffairs.com. "I heard nothing from Litton until March 2010 at which point I was told to begin paying the 3 month trial payments and to submit almost all of the documents again, basically starting the process over. As of now, May 2010 I am still submitting documents and getting the run around and my fourth trial payment is due June 1. At this point I have no idea what will happen and have little faith in Litton."
Last week, as part of a continued effort to improve servicer performance, the administration hosted a summit with representatives from participating mortgage servicing companies to discuss ways to move qualified homeowners into permanent modifications, improve homeowners' HAMP experience, quickly implement the Second Lien Modification Program and Home Affordable Foreclosure Alternatives, and maintain the pace of new trial modification starts.
The administration also outlined for servicers its plans to begin reporting more detailed performance measures. By July 2010, this reporting will include the eight largest servicers and will focus on servicer compliance, program execution, and homeowner experience.
Reporting will include the following:
Servicer Compliance with Program Guidelines
• Results of servicer-level loan-file reviews assessing whether loan files were appropriately evaluated
• Identification of all compliance activities performed for servicers and a summary of areas identified for future compliance focus
Program Execution
• Average time from start of trial modification to start of permanent modification
• Servicer implementation timelines for program updates
• Information about alternatives made available to homeowners ineligible for HAMP
• Information about alternatives made available to homeowners who fall out of HAMP trial modifications. Alternatives may include non-HAMP modifications, payment plans, and short sales.
Homeowner Experience
• Servicer handling of calls from homeowners (speed to answer, hang-up rates.)
• Time it takes to resolve homeowner problems that have been reported by third parties such as housing counselors, attorneys, and congressional and other government offices
• Servicer share of homeowner complaints to the Homeowner's HOPE Hotline
In the coming months, the administration said it will continue to enhance its methods of holding servicers accountable for their obligation to provide helpful and timely assistance to struggling homeowners.