The Department of the Treasury released its fourth report card on how mortgage lenders are doing modifying loans for eligible homeowners under the government’s Making Home Affordable program (see the first, second and third report cards). Eighteen lenders started modifications for less than 20% of their eligible loans, below the national average. Only ten lenders modified more than 20% of their eligible loans. Last month, seventeen lenders modified fewer loans than the national average, while nine lenders modified more loans than the national average.
Treasury recently announced a number of improvements to HAMP procedures, including increasing accountability and transparency. Servicers will now have to submit plans to reach a decision on trial modifications for which they have received documentation, as well as provide a modification agreement or denial letter to borrowers. Letters that provide a reason for denial will empower borrowers and housing counselors to challenge modification decisions based on erroneous information, which is an important corrective measure that has been largely unavailable until now.
Servicers who do not meet performance obligations will now be subject to consequences, such as fines. However, the effectiveness of this sanction will depend on the specifics of the performance standards in the Servicer Participation Agreement, as well as the severity of the repercussions.
Treasury will begin reporting data on the number of permanent modifications in December, as well as the number of trial modifications likely to convert to permanent modifications by the end of the year. Since long-lasting reductions in foreclosures depend on converting trial modifications to permanent ones, this data is crucial for monitoring progress. However, local-level data on trial and permanent modifications as a percentage of eligible loans are still not available. This data would allow local advocates to identify localities who are particularly successful in getting trial modifications put into permanent ones and work to implement these strategies in less-successful communities.
Here are the results for performance through October 2009: