In order to encourage servicers to put borrowers into permanent modifications, Treasury makes incentive payments to servicers for every successful permanent modification. Treasury also makes incentive payments for every successful short sale or deed-in-lieu performed under the Home Affordable Alternatives Program. These incentive payments will be withheld from Bank of America, Chase, and Wells Fargo for second quarter 2011 and could even be permanently withheld if the servicers fail to improve next quarter.
The person familiar with Litton said he had examined loans that met the criteria for a government modification, but were denied it, sometimes because Litton employees made mistakes in how they calculated the borrower’s income. Other loans were denied the modification on the grounds that documents were missing, even though Litton’s computer system reflected receipt of the necessary paperwork, the person added.
A lack of transparency in loan servicers’ decision-making processes often frustrates homeowners applying for help from the Home Affordable Modification Program (HAMP). If homeowners were turned away from HAMP, their servicer was not required until recently to provide more than a simple explanation—“missing paperwork” or “ineligible borrower” would suffice. If homeowners have reason to believe that they are eligible, the lack of specific denial information gives them little to work with if they try to contest the decision.
That’s why we oppose recent efforts to eliminate HAMP and other foreclosure response programs, like the Neighborhood Stabilization Program. Pulling out support to distressed homeowners at this juncture would be disastrous for neighborhoods trying to recover from the foreclosure crisis.
Permanent modifications are continuing to grow slowly, and the increase in trial modifications marks first time trial modifications have grown in the region in eight months. Chicago region permanent loan modifications rose by 3.58 percent from November to December, compared to 3.12 percent growth from September to October and 4.73 percent growth from October to November (see charts A and B).
Permanent modifications continue to grow increasingly slowly and trial modifications are still dropping, though October marked the end of the six-month streak of double-digit decreases in active trial modifications. Chicago region permanent loan modifications rose by 3.1 percent from September to October, compared to 6.6 percent growth from July to August and 4.1 percent growth from August to September (see charts A and B).
Permanent modifications are increasingly slowing, while September saw the sixth straight month of double-digit decreases in active trial modifications. Chicago region permanent loan modifications rose by 4.1 percent from August to September, compared to 9.2 percent growth from June to July and 6.6 percent growth from July to August (see charts A and B). Regional trial modifications fell by 14.1 percent from August to September, which is less severe than the 21 percent decrease from July to August.
Growth in the number of permanent modification continues to slow, while August saw the fifth straight month of double-digit decreases in active trial modifications. Chicago region permanent loan modifications rose by 6.6 percent from July to August, compared to 14.8 percent growth from May to June and 9 percent growth from June to July (see charts A and B). Regional trial modifications fell by 21 percent from July to August, which is less severe than the 29.8 percent decrease from June to July.