The number of modification services and the volume of loan modifications continues to increase as the federal government forks out nearly $10 billion for seven servicers to perform modifications. But the rapid growth in the industry is dogged by warnings of shady operators.
A report today from the Federal Housing Finance Agency indicated 8,953 loans owned or guaranteed by either Fannie Mae or Freddie Mac were modified in January, edging up from 8,688 in December and a monthly average of 8,000 during the fourth-quarter. Almost two-thirds of January’s modifications involved both a rate reduction and a term extension.
Bank of America Corp. said in its first-quarter earnings report that it modified nearly 119,000 during the period. BoA also said it launched a new program that utilizes affordability measures to qualify borrowers for modifications.
GMAC Mortgage LLC announced last week that it signed the Home Affordable Modification Program servicer participation agreement on April 13, though it started to prepare for the program earlier. So far, GMAC has distributed more than 100,000 financial packages to borrowers who might potentially be eligible for the program.
GMAC is one of seven servicers that will be paid $9.9 billion by the U.S. Department of the Treasury to modify mortgages, according to published reports. The other companies — which were recently joined by Ocwen Financial Corp. — are Chase Home Finance LLC, Wells Fargo Bank NA, CitiMortgage Inc., Saxon Mortgage Services Inc. and Select Portfolio Servicing.
Orange County — which was at the epicenter of the subprime mortgage meltdown — is seeing a surge in new loan modification companies. More than a dozen Orange County firms with names beginning with an ‘A’ were listed by California’s Department of Real Estate as approved to collect advance fees for loan modifications. We’ll cover the ‘B’ through ‘Z’ listings in another story.
The Office of the Comptroller of the Currency issued a consumer alert today warning borrowers to avoid modification companies that advise them to stop making payments. The scammers often take that money from the borrowers and do nothing to help the modification.
One of those scammers was Bobby John Herrera who, in December, was indicted for fraudulently claiming he could help borrowers obtain modifications on their mortgages, Arizona’s attorney general reported. He often charged an upfront fee of $1,245 but failed to provide any modification assistance.
This month, the Arizona Daily Star reported that Herrera pleaded guilty to bilking 47 desperate borrowers. He could get up to five years in prison when he faces sentencing on May 13 and could be ordered to pay $73,000 in restitution.
America’s Law Group issued a press release last week stating that it will refund the borrower’s $250 processing fee if it fails to strong-arm a mortgage lender into a loan modification. The company searches for violations of the Truth in Lending Act and the Real Estate Settlement Procedures Act to extort more modification concessions from lenders.
Global West Resources Inc. said earlier this month that it will rename itself We Save Homes Inc. The publicly traded Southern California company hopes to relieve itself of administrative distractions with its recent hiring of investor relations firm Kulman IR LLC.
Loan Mod Audit has been launched to help servicers predict a borrower’s ability to repay under proposed modified terms, MortgageDaily.com advertiser Verification Bureau Inc. announced Monday. The service authenticates the borrower’s financial distress with FORM 4506-T income verifications.
An alliance announced yesterday between National Loan Auditors, Rapid Reporting and PLATINUMdata Solutions Inc. enhances forensic audits with automated credit and property value data. National Loan provides reports for consumer bankruptcy cases with an underwriting and loan analysis as well as recommended modification terms.
Mortgage servicers could see better loan modification packages from borrowers who spend $99 on LoanModDVD. The disc provides step-by-step instructions for the modification process.
Another firm, LoanModificationForFree.com, hopes to guide borrowers through the modification process with an online course, an April 14 news release said. The company hopes to generate advertising revenue from the free service.
Better Life America claims that one borrower using its services obtained a 455 basis point reduction in her interest rate even though she was 20 months past due. In addition, $70,000 in past-due balances were added to her loan balance.
