A Texas-based modification company is among the fastest growing private companies in the country. Meanwhile, hundreds-of-thousands of modifications have been completed by U.S. servicers this year outside of a government program that promises hundreds-of-thousands more.
In its National Delinquency Survey yesterday, the Mortgage Bankers Association said record delinquency would have been worse without modification programs.
“The various loan modification programs continue to have an impact on holding foreclosure rates below where they otherwise would be,” MBA Chief Economist Jay Brinkmann said in the report. “In measuring the effectiveness of industry or government loan modification programs, it is necessary to compare the results not with the total foreclosure and delinquency numbers reported here but with the smaller subset of borrowers who can and want to qualify.”
During June, U.S. mortgage servicers completed 96,000 loan modifications, lower than 101,000 in May, according to recent data released by HOPE NOW. From January through June, servicers completed 689,000 loan modifications.
HOPE NOW — which obtained its data from its 27 members that serviced 38.3 million loans accounting for around 73 percent of U.S. mortgages — said June’s total included 40,000 prime mortgage modifications and 56,000 subprime modifications.
HOPE NOW member Wells Fargo & Co. reported this month that it modified more than 240,000 during the first seven months of 2009, including 20,219 modifications done under the $75 billion Home Affordable Modification Program.
Wells Fargo Home Mortgage co-president Mike Heid noted in the report that recent discussions with the Obama administration were candid and productive, and the company expects to modify 500,000 loans under the HAMP.
American Home Mortgage Servicing Inc. issued an Aug. 4 statement clarifying that it only became a HAMP servicer late last month. The Coppell, Texas-based company was concerned that it HAMP activity appeared to cover a longer period of time.
In the 12 months ended June 30, American Home said it completed more than 64,000 loan modifications including 37,000 in the first-half 2009.
Litton Loan Servicing LP announced this month its participation as a HAMP servicer. The Houston-based subsidiary of Goldman Sachs & Co., which services around 370,000 loans, said it has offered more than 38,000 modifications to borrowers and claims it had already modified 44,000 loans during the 12 months before signing the HAMP agreement.
Also signing up as a HAMP servicer was IndyMac successor OneWest Bank, FSB, according to an Aug. 11 announcement. Much of the HAMP was modeled after the Federal Deposit Insurance Corporation’s modification strategy at IndyMac. OneWest reported nearly 19,000 completed modifications since acquiring the operations in March.
“Going forward, OneWest will apply HAMP to all of the eligible loans that it owns as well as all eligible loans that it services for third parties,” the statement said. “Previously, OneWest modified mortgages under the FDIC modification program for the majority of its portfolio as well as HAMP for its portfolio of Fannie Mae and Freddie Mac loans.”
In a July press release, Ocwen Financial Corp. — which was one of the first HAMP servicers — cited a Bank of America Mortgage Credit Research Report that reportedly said the West Palm Beach, Fla.-based company has the highest industry average modifying subprime mortgages delinquent more than 90 days and converting them to performing loans. Ocwen said it has already solicited about HAMP 60,000 modifications. It reports a re-default rates of just 24 percent.
Fannie Mae and Freddie Mac completed 10,422 loan modifications in May, falling for the second month in a row, according to data reported by the Federal Housing Finance Agency. April modifications were 13,787, while 61,557 modifications were completed from Jan. 1 to May 31. May’s activity included 2,220 extended terms, 263 rate reductions and 6,444 combination term extensions and rate reductions.
A report last month from Moody’s Investors Service indicated that HAMP has not gained traction. Servicers have been slow to adopt HAMP because of increased call volumes, short staffing, investor challenges and system changes. Also hampering adoption was the difficulty in obtaining borrower documentation.
But as servicers have been overcoming these issues, Moody’ predicted, “In the coming months, we expect to see the volume of modifications rolling into a ‘closed’ status increase substantially.”
HAMP modifications in areas where home prices have declined may be eligible for the $10 billion Home Price Decline Protection, the Treasury recently announced. By helping to offset losses on failed modifications, the government hopes to boost HAMP activity. HAMP modifications started after Sept. 1 are eligible for the HPDP.
The president of the National Association of Realtors issued a statement last month praising the Department of Housing and Urban Development and the Obama administration for implementing HAMP.
But Arizona Attorney General Terry Goddard isn’t so thrilled with results from HAMP servicers. He sent a letter to the group earlier this month telling them to boost their efforts. Goddard said that many companies have not made a good-faith effort to work with borrowers and called on servicers to streamline the modification process.
A “second look” program was announced by the Mortgage Insurance Companies of America on July 27. The program analyzes the servicer’s calculations in the net present value test to determine if servicers will lose more from a modification or foreclosure. Servicers can submit loans for the second-look program immediately after the net present value test is failed.
California Attorney General Edmund G. Brown Jr. issued a statement last week warning 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office by Aug. 22 or face up to a year in jail and fines ranging from $1,000 to $25,000 per violation. He also ordered more than 20 modification firms to justify “suspicious” claims in advertisements including money-back guarantees, high success rates and promises of specific modification to be obtained. Other suspicious claims included suggestions that modifications are federally mandated.
The State Bar of California announced that it has obtained resignations from two attorneys because of their loan modification activities. Charges were reportedly filed against a third lawyer.
Mortgage Cadence Inc. announced in July that it is providing primary analytic and document solutions for Urban Settlement Services. The move is expected to automate much of the data importing procedures for loan modifications.
Convergys Corp. announced this month that it teamed up with Sterling Home Retention Services to support the loan modification process for the 20 biggest servicers as well as Fannie Mae, Freddie Mac and investors. The turnkey modification system begins with an initial call to the borrower from Sterling, which is followed up with contact from a trained Convergys agent.
Also providing modification support for servicers is National Creditors Connection Inc., which said in a statement Wednesday that it obtains signatures, reviews documents, verifies tenancy and helps locate contact information for borrowers.
The parent of Halo Loan Modification Services LLC — Allen, Texas-based Halo Group Inc. — was ranked as the 533rd fastest growing private company in this year’s Inc. 500. “Halo Loan Modification has seen substantial growth over the past year that has exceeded our expectations,” the modification unit’s president Michael Berry said in a statement.
An offering from ModPilot that starts at $495 promises to help borrowers negotiate the loan modification process, a news release Wednesday said. Another do-it-yourself kit was launched by ModificationProfessor earlier this year.
A new book co-authored by Eduardo Delgado, Loan Modifications Exposed, also promises to help guide borrowers down the easiest path for a loan modification.
