The $75 billion program pays lenders to modify the mortgages of troubled borrowers, typically lowering their payments by about $500 a month.

But so far, fewer than 200,000 borrowers have received a permanent change to their loans, according to Treasury Department data released Wednesday, a small fraction of the 3 to 4 million borrowers who government regulators initially said the program could help before it expires in 2012. That may not bode well for efforts to stabilize the housing market. Credit Suisse has estimated that 3.2 million foreclosures would have to be prevented this year for home prices to rise modestly.

“Clearly the numbers that were discussed by the administration set up an expectation that just don’t deal with the reality we’re in,” said John Courson, president of the Mortgage Bankers Association.

Administration officials have acknowledged that the program, known as Making Home Affordable, got off to a slow start and has yet to reach its full potential. Many lenders didn’t begin enrolling borrowers until last summer, months after the program was launched. By then, the primary cause of foreclosures had shifted from the risky mortgages that helped spur the financial crisis to rising unemployment. The latter is tougher to address because jobless borrowers often have little money with which to pay any type of home loan.

Through January, nearly a million borrowers had gotten at least some reduction in their mortgage payments as part of the program, but more than three-quarters have yet to win a permanent modification and must still prove they qualify, according to Treasury data. The program “is doing the job it was designed to do, Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, said in a statement. “Struggling families are receiving payment relief and the housing market is showing signs of stabilization.”

The unemployment factor

But the administration is facing demands to expand the program to help more unemployed borrowers, or to lower the loan balance of underwater borrowers — those who owe more than their home is worth. Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, has launched an investigation into the program. “While I applaud Treasury’s efforts, numerous concerns have been brought to my attention regarding the effectiveness and efficiency of the MHA program and the extent to which it has assisted struggling homeowners,” he wrote to Treasury Secretary Timothy F. Geithner earlier this month.

More than half of those who have received mortgage relief so far have said they needed it because they’ve lost their jobs or had their income drop for some other reason. But many unemployed borrowers can’t qualify for help because they don’t have enough income. Housing advocates argue that some of the billions of dollars set aside for the loan modification program should be diverted into short-term loans for these borrowers.

And underwater borrowers who have little chance of recouping the lost value of their homes need a more generous program, housing advocates say.

Changes to the program are possible, administration officials have said, but it is unclear how extensive they will be.

No appeals process

Another challenge for borrowers is that the program lacks a formal appeals process for those denied relief, leaving homeowners largely to work out problems on their own.

That has been the challenge for Alice Valentine, a Southeast Washington homeowner who had a decrease in income after a work-related injury. When she first sought a loan modification from Bank of America, she was told she qualified, Valentine said. But the promised forms she needed to fill out never arrived, she said.

“I never received anything in writing from them except for threatening letters,” Valentine said. “I have been getting nothing but the runaround.”

So she wrote to the White House instead. President Obama responded, offering encouragement. “The road ahead is difficult, but if we move forward resolutely, then I am confident we will overcome this crisis,” Obama wrote.

A Bank of America spokeswoman said the bank is following the program’s guidelines. “We apologize if there was any miscommunication. We would like to reevaluate her eligibility once her financial situation improves,” said spokeswoman Jumana Bauwens.

The program encourages lenders to modify mortgages by offering them a series of incentive payments. But these payments may not be enough to shift the financial calculations made by lenders before offering mortgage relief. “It is clear the incentives being paid are nowhere close to reimbursing the servicers for the cost and expenses that they are devoting to modifications,” said Courson of the Mortgage Bankers Association.

‘Set up to fail’

Some lenders have sold the loans they made to investors under contracts that restrict modifications. In addition, about 600,000 delinquent borrowers potentially eligible for the program can’t apply because their servicers have not signed up, according to Treasury data.

When Yvonne Gipson, 69, applied for relief on the loan for her Annapolis home last year, she was told by her mortgage servicer, PNC, that her loan had been bundled into a security with other loans by Goldman Sachs, she recounted. PNC informed her that the rules governing that security did not allow the loans to be modified, she said.

Instead, wanting to see her catch up, PNC suggested it could raise her monthly payments. The new payments would consume 66 percent of her income, more than double what would be offered under the federal program. “I was being set up to fail,” she said. “I am trying to do the right thing. I find the whole thing devastating.”

PNC declined to comment and Goldman Sachs said the loan can be modified.

Despite its slow start, the federal program has established industry standards for the types of loan modifications borrowers should receive. So far, borrowers who receive loan modifications under the program are less likely to re-default than those who get help under other mortgage relief programs. About 25 percent of borrowers in the program were delinquent on their new lower payments, according to the Treasury Department, while about half of borrowers in other mortgage relief efforts fall behind again.

But more borrowers in the federal program could re-default later. More than 60,000 of the borrowers who initially enrolled in the program have already failed out.

Part of the problem is that the financial burden on many borrowers extends beyond their primary mortgage to other types of debt. The federal program focuses only on lowering the payments on a primary mortgage to affordable levels, or about 31 percent of income. But even after a modification, many borrowers still have high levels of debt, and federal regulators also want to bring down the payments for second loans, such as home-equity lines. Since announcing the expansion of the program to second liens last April, just one lender, Bank of America, has signed up.

Article Source: Washington Post

Under the proposal, loan servicers would reduce eligible borrowers’ monthly payments to no more than 31% of their household income for up to nine months. Unlike a modification, however, the arrears would be tacked onto the end of the mortgage.

As part of the proposal, the association has asked the Treasury Department to provide loans to some servicers to cover payments to the mortgages’ investors. Treasury officials, who met with the group last week, have not made yet a determination, a spokeswoman said.

The trade group’s goal is to address the growing number of people who are falling behind on their mortgages because they’ve lost their jobs.

“Borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job,” said John Courson, the association’s chief executive.

Once borrowers find new employment, they will be considered for a long-term modification under the Obama administration’s foreclosure prevention program.

Most consumer advocates, however, do not think forbearance plans are an answer to the foreclosure crisis. Most delinquent borrowers need more help than just a temporary reduction of their payments.

Also, it’s unlikely that borrowers will find new jobs in nine months in this tough economy, said Kathleen Engel, a law professor at Suffolk University in Boston who specializes in foreclosures. She said the program would need to last at least two to three years to be effective.

The association unveiled its proposal the same day that Federal Reserve Chairman Ben Bernanke told Congress that he’s concerned about the weak state of the job market. And the White House’s top economic adviser has said she expects unemployment to remain around 10% for the rest of this year and remain high in coming years.

Engel suggests the government provide loans directly to the distressed borrowers to help them meet their obligations while unemployed.

“So far, we haven’t seen a lot of help going to the borrowers,” she said.

The Obama administration last week announced a $1.5 billion initiative to help borrowers who are unemployed or owe more than their homes are worth. The program funnels the funds to five state housing finance agencies and charges them with coming up with programs to help these homeowners

Article Source: CNN Money

Full Disclosure:
When either just describing or encouraging loan modification, the servicer shall give the debtor information that will aid them in understanding the terms of the modification and the process of modification, and debtors should also be given written information about the costs, terms, and risks of modification that is clear and concise. This should be given in a timely manner as to allow debtors to make an informed decision.

Fair Lending:
Modifications under the plan must abide by the Equal Credit Opportunity Act and the Fair Housing Act, both of which do not allow discrimination on a prohibited basis connecting to mortgage transactions. Loan modification plans are subject to fair lending laws, and both servicers and lenders should make sure debtors are being treated equally when it comes to mortgage modification.

Consumer Complaints and Questions:
Servicers should have a system to answer complaints and questions regarding loan modification timely and appropriately, and that every question and complaint is taken seriously and answered appropriately.
This protection will ensure that you and your family are not treated unfairly and can receive the full benefits a mortgage modification.

Article Source: Loan Store

But that night an unwanted visitor arrived: a process server delivered papers that ordered Mrs. Bagnarol and her family to get out. The bank had foreclosed on their property, and they were all being evicted.

Emotions exploded. Not now, the family cursed. A sheriff’s deputy was called to keep the peace. Mrs. Bagnarol died a day later.

But the unfortunate timing of the official visit was not the only source of the anger. More troubling were the financial deals that led to the visit — and the decision by lenders to sign Mrs. Bagnarol up for one exotic mortgage after another.

“It’s definitely elder abuse,” said Carolina Bagnarol, her daughter. “There’s predatory lending here.”

Ms. Bagnarol has filed a lawsuit against a lengthy list of lenders she said took advantage of her mother. The loans plunged her mother deeper into debt with each mortgage payment, to the point of financial ruin. The lawsuit contends that Mrs. Bagnarol was pursued and persuaded — twice over — to take out ultimately disastrous loans on the family’s property.

In recent years, 70 percent of the elderly have been solicited to take out new mortgages, according to a survey by AARP.

“Older people seem to be targeted in part because they own their houses and have owned them for a long time and have equity in their houses,” said Jean Constantine-Davis, senior lawyer for the AARP Foundation.

Mrs. Bagnarol was in her late 70s and suffered from the onset of dementia when she signed the loans, family members said.

“This is one of the most egregious cases I’ve ever seen,” said Michael Rooney, the San Francisco lawyer representing the family in the lawsuit. “The terms were so horrible — negative amortization and adjustable rate — no one would believe this loan was good for her.”

The types of loans Mrs. Bagnarol received were popular at the time. Sold under names like Option/ARM and “Pick-a-Payment,” borrowers could make minimum payments that did not cover the entire amount due. The balance was then added back into the loan, increasing the overall debt.

Eventually that debt would come due, creating huge monthly payments that many homeowners could not afford. Critics blame these loans for helping to cause the housing market crash. Lawmakers agree — as of Jan. 1, it is illegal to write this type of loan in California.

Mrs. Bagnarol first bought the property in 1994 for $535,000, her family said, and for most of the intervening 15 years had a conventional 30-year fixed-rate mortgage. As the property’s value skyrocketed in the boom years, she refinanced to take out money for a family business and to build a new main structure.

This eventually led to a $1,365,000 negative amortization loan in 2005. Its low interest rate soon expired, and she refinanced with another $1.5 million loan on Dec. 29, 2006; under its terms, her monthly payments eventually spiked to $14,541.32 from $5,176.81. When Mrs. Bagnarol fell behind, the debt spiraled to $1,640,000 by December 2008.

Family members say that when they tried to pay on behalf of their mother, the bank was uncooperative. Events snowballed into foreclosure, followed by eviction notices. Eight people live at the compound, including Ms. Bagnarol and her three children.

The situation has torn the family apart. It was Mrs. Bagnarol’s son-in-law, Michael Polizzi of Residential Pacific Mortgage in Alamo, who promoted the loans. He bristled at the notion that he had taken advantage of her.

“If Miss Bagnarol is alleging any improper conduct by RPM or by me, those allegations are false,” Mr. Polizzi said, reading a prepared statement after conferring with his lawyer.

Efforts to save the family homestead have been further complicated by changes in bank ownership. The loan started with World Savings, an institution acquired by Wachovia, which itself was bought by Wells Fargo, a bank that had a policy against negative amortization loans, but now finds itself dealing with the debris.

Giuseppa Bagnarol, 82, was in her final hours in August, dying at home surrounded by the large family she presided over as matriarch.

Wells Fargo is paying attention to the Bagnarol case. On Tuesday afternoon it offered a reprieve. Teri Schrettenbrunner, a spokeswoman for Wells Fargo Home Mortgage, said the bank had halted the eviction process “while we work with her mother’s estate to bring the mortgage payments current.”

Carolina Bagnarol, a former business manager for the rock group Journey who is no stranger to vicissitude, is skeptical. But she is grateful that her mother never knew that her homestead was in jeopardy.

Carolina’s brother, Franco, agreed. “It would have killed her sooner,” he said, “and she would have died unhappy.”

Article Source: New York Times
Scott James is an Emmy-winning television journalist and novelist who lives in San Francisco.

Lenders use special codes to let credit bureaus know what customers are borrowing and whether they’re paying on time. When the loan modification program, which lowers mortgage payments for homeowners who are behind in their payments or in danger of imminent default, was announced in February, lenders used an existing code, called AC, to signal that borrowers were participating in the program.

The problem for those borrowers, however, was the fact that the AC code signals that a consumer has made only a partial payment. That often had a significant impact on the scores of borrowers with good credit who had made all of their payments on time. A Treasury Department spokeswoman estimated that their scores could fall from 30 to 100 points, depending on other information in their credit file .

Why use an old code? The AC code was the closest fit, so the Consumer Data Industry Association recommended using it until it could develop a new one.

One Bank of America executive, for instance, confirmed in this recent New York Times article, that it reported borrowers who made timely payments before and after agreeing to loan modifications as making only partial payments. Presumably, the bank used the AC code, which damaged the credit of many borrowers.

But recognizing that participating in the modification program alone need not harm credit scores by default, the trade association, in cooperation with the Treasury Department, developed a new code, which took effect in November. “The administration felt that it was important to ensure that homeowners who faced foreclosure weren’t unfairly punished for seeking a loan modification,” said Meg Reilly, spokeswoman for the Treasury Department.

The new CN code signifies a loan modified under a federal government plan. It will have no impact on credit scores in the near future.

But will it ever? That depends on whether FICO, which creates the most popular credit score formulas for credit bureaus like Equifax, Experian and TransUnion, concludes that its appearance in a credit file is somehow predictive of late bill payments or other bad behavior. For what it’s worth, the old AC code is correlated with delinquencies and such.

“Our first opportunity to study the predictive value of the new CN special comment code will come later this year, after one of the national credit reporting agencies sends us a new sample of consumer credit reports for our use in redeveloping our scoring models used by that agency,” said Craig Watts, a FICO spokesman. As a result, the FICO scoring formula ignores the CN code in the near term.

Still, the new code is separate from current information about whether borrowers are delinquent on their payments or not. So borrowers with the CN code on their records that pay late will still see their credit scores fall.

In addition, the lenders themselves ultimately decide whether to use the new code. That said, industry best practice is to follow the guidelines, because it’s in all lenders’ best interests to have as much information as possible about potential borrowers, said Norm Magnuson, spokesman for the reporting trade association. For instance, a Bank of America spokesman said Monday that the bank is complying with the guidelines.

As a result, the exact impact of a loan modification on a credit score does depend on several factors as outlined here. (Check here for more details on how a person’s credit report information can influence the score and check here for other advice on improving a low credit score.)

As for those who are current on their payments and were in a trial mortgage modification before the new code was adopted in November (and thus got the “AC” black mark), Mr. Magnuson said the guidelines did not address such retroactive status. But Ms. Reilly, the Treasury Department spokeswoman, said the AC code would eventually be dropped for such people.

Ideally, banks themselves will replace the old code that damages credit scores with the new one that doesn’t (yet). If they don’t make the fix, borrowers should call and request it and file disputes with the credit bureaus asking for a correction of credit reports that have the old code.

But shouldn’t people with modified loans who never missed a payment not suffer a credit score decline under any circumstances? Industry experts believe that some mark is necessary. The reason: those getting the modifications in the first place probably pose more risk to future lenders, given that the mortgage modification program was devised to help people whose money problems make them vulnerable to foreclosure. “They are having financial difficulty, so there is some risk involved,” said Mr. Magnuson.

Do you think people getting loan modifications should escape a black mark? Why or why not?

Author: JENNIFER SARANOW SCHULTZ

A group of billionaires, hedge-fund managers and ex-Goldman Sachs executives are building a banking empire in California—with assistance from Uncle Sam.

Exactly a year ago these investors acquired the assets of collapsed mortgage lender IndyMac Bank from the federal government for about $1.5 billion and renamed it OneWest Bank. Earlier this month, OneWest purchased First Federal Bank of California, a failed Los Angeles-based lender.

With the purchase, Pasadena, Calif.-based OneWest more than doubled its branches to 72 and increased its total assets by a third to $24 billion, making it the largest bank based in Southern California.

The OneWest ownership roster reads like an excerpt of the Forbes 400. It includes J.C. Flowers & Co., an investment firm run by former Goldman Sachs Group Inc. banker J. Christopher Flowers; Paulson & Co., the large hedge fund; MSD Capital, which invests the fortune of computer mogul Michael Dell; and a fund controlled by famed speculator George Soros.

How successful OneWest’s owners are with the venture—both financially and in the public eye—will influence whether the government welcomes more private capital into the banking system.

Federal regulators, struggling with a rash of failures, can save money by lining up a ready buyer when a bank fails. But the Federal Deposit Insurance Corp. has been wary of private-equity investors, given their reputation for loading companies with debt and selling businesses quickly.

Of the 140 banks closed by the government this year, private investors have acquired only two outright—IndyMac and Florida’s BankUnited. Private equity investors argue that they should play a bigger role, as their funds’ billions in unspent capital could bolster the banking system.

Part of the test will be how well OneWest works with financially troubled homeowners, especially under the Obama administration’s loan-modification programs.

OneWest is already generating hefty profits. For the six months ended Sept. 30th, it posted net operating income of about $700 million, according to filings with the FDIC. In 2007 IndyMac, saddled by troubled mortgages, posted a $614 million loss.

During the FDIC’s roughly eight-month control of IndyMac before selling it, the agency cleansed the bank of some of its bad loans through asset sales and write-downs, shrinking it by about 27%, according to filings. It also reduced the bank’s headcount by about 45%.

The FDIC also agreed to share in losses with the ownership group in both the IndyMac and First Federal deals.

OneWest’s improved performance allowed it to bid aggressively for First Federal. The owners didn’t invest additional money to acquire the bank’s assets; rather, the money came from cash on OneWest’s balance sheet.

OneWest paid $401 million, or a 6.6% premium, for First Federal’s assets, according to FDIC documents. That makes it among the first FDIC-arranged deals in which a premium was paid for a failed bank’s assets—many are sold at a discount to their assets.

An FDIC spokesman says the agency doesn’t comment on open and operating institutions.

Mr. Mnuchin, 47 years old, says the bank wants to grow to between 100 to 150 branches. He says the owners enjoy owning the bank privately because they don’t have to focus on short-term quarterly results, but acknowledges that cashing out through a sale or initial public offering is possible down the road.

One area of focus is loan modifications. When the FDIC sold IndyMac to OneWest, the new owners pledged to continue the agency’s loan-modification program for which IndyMac had served as a testing ground.

Since it took over the IndyMac portfolio, OneWest has reworked nearly 13,000 troubled loans under the FDIC program. Through November, it had also begun trial modifications, the first step toward reworking loans under an Obama administration program, for 19,623 borrowers, or 18% of its borrowers estimated by the government to be eligible for the program.

FDIC Chairwoman Sheila Bair has taken a personal interest in OneWest. In July the FDIC hosted a number of private-equity investors to discuss bank investing. During the meeting, Ms. Bair approached Mr. Mnuchin and asked him how the modifications were progressing, according to people familiar with the exchange.

The bank has come under criticism for its loan modification practices. In a decision issued Nov. 19, a New York state court judge barred a foreclosure action and ordered the cancellation of a borrower’s loan because of OneWest’s conduct in the case.

Judge Jeffrey Spinner called OneWest’s actions “harsh, repugnant, shocking and repulsive” and said that it was “made clear to the Court that plaintiff had no good faith intention whatsoever of resolving this matter in any manner other than [foreclosure].” In addition, Judge Skinner questioned the bank’s estimate of the amount owed by the borrower.

Mr. Mnuchin says OneWest disagrees with the judge’s ruling and is appealing. “In the case of that loan, we do not own it but service it on behalf of a third-party investor.”

“We’re in a difficult economic environment and very sympathetic to the problems many homeowners face, but under the government’s program there’s not a solution in every case,” said Mr. Mnuchin, a 17-year Goldman Sachs veteran. As a large servicer of loans held by other investors, OneWest can be bound by underlying servicing agreements that sometimes prohibit loan modifications.

Mr. Mnuchin has real estate issues of a different sort. He’s moved to California, and a broker is showing his Manhattan duplex apartment at 740 Park Avenue, one of New York’s most prestigious addresses. It’s listed at $37.5 million.

Out in Los Angeles, Mr. Mnuchin has initiated the creation of the not-yet-announced OneWest Foundation, which will be seeded with $10 million to support neighborhood activities. And on Dec. 18, just as First Federal branches reopened as OneWest locations, Mr. Mnuchin attended a Christmas toy drive at a youth center with Governor Arnold Schwarzenegger.

His new home also allows Mr. Mnuchin to enjoy the fruits of another investment: Dune Entertainment, an affiliate of his New York-based investment fund, Dune Capital Management, which he still co-heads. Dune has a film financing deal with Fox Filmed Entertainment, a unit of News Corp., which owns this newspaper.

He recently attended the Hollywood premiere of “Avatar,” the science-fiction thriller in which Dune has a stake.

“I do not normally go to movie premieres,” said Mr. Mnuchin. “But given our investment, I went to ‘Avatar.’ It was spectacular.”

Write to Peter Lattman at peter.lattman@wsj.com and Ruth Simon at ruth.simon@wsj.com

If you have a decent credit score and you have equity in your home then there is a good chance that you can refinance to a much lower mortgage interest rate. It is extremely important that you have some equity in your home. Many people have tried to refinance and they have found that their home value is much lower than they expected. This is causing it to be very difficult to get through the refinance appraisal step.

It is also extremely important that you have a credit score of 680 or better to get a very low mortgage interest rate. If you have bad

credit and little equity in your home then you might want to consider the home loan modification process because it is not likely you can refinance to the advertised low mortgage rates. For more information on the home loan modification option make sure to check out the Making Home Affordable website.

The Making Home Affordable website is quite extensive so make sure you plan to spend several hours and possibly even a few days on this website. You could honestly sit on this site for hours and still not look at all the data that is available for free. If you do not understand all the financial terms then you might want to consider calling a HUD representative as they can help you with all your foreclosure assistance questions.

President Obama and his staff have worked very hard to help you stay in your home and avoid foreclosure. Make sure to take advantage of this opportunity and lock into a low mortgage interest rate or go through the home loan modification process. Either one of these options is likely to help you save your home and make life much more enjoyable.
If the current economy and your financial struggles have gotten you down make sure to check out the inspirational blog My Life After Retail. The blog is an account of the journey to find peace of mind and happiness in today’s society.
Author: Alan Lake

Trial modifications last for three months before becoming eligible for permanent status; during that time, homeowners must remain current with their payments and submit documentation showing proof of income and that they are owner-occupants.

On Thursday, the Treasury Department released a list of servicers and the number of permanent modifications each has made.

About a quarter of borrowers in trial modifications already are in default again on their mortgages, according to Treasury, which has criticized banks for not doing more to make trial modifications permanent. Servicers have countered that borrowers have frequently failed to provide documentation of income or other paperwork.

Wells Fargo, for example, says that it has 99,674 modifications underway, including trials. Of those that have completed the three-month trial as of Nov. 30, 40% are either ready to convert to a permanent loan, or have converted. But 45% haven’t provided all the necessary documentation.

The remaining borrowers who have made three trial payments were determined to be ineligible for Home Affordable Modification Program (HAMP) modifications after a review of the documents they submitted.

Mark Zandi at Moody’s Economy.com says the program as structured now won’t do enough to reduce the foreclosure problem. “At best, without substantial changes in the plan, we’ll get (a total) of 500,000 to 750,000 permanent modifications, which is well below what the administration is hoping for.”

The administration hopes the $75 billion plan will help up to 4 million homeowners get more affordable monthly mortgages as servicers rework loans to lower payments.

Last week, the government announced a Dec. 31 deadline to convert about 375,000 borrowers with trial modifications into permanent modifications. They also threatened banks with financial penalties for failing to make progress.

Treasury officials on Thursday said they were on track to meet their goals in the next several years, and added that borrowers who get modifications are saving an average of $550 a month.

But as criticism mounts, efforts have been revived to pass legislation to allow federal judges to cut interest rates, reduce loan balances and lengthen mortgage terms in bankruptcy court. Rep. Barney Frank, D-Mass., head of the House Financial Services Committee, said this week that he’ll back the measure, which will be attached to broader legislation.

Similar legislation failed to get Senate support in the spring.

Article Source: USA Today

“This is the highway system that will help more people get HAMP modifications, more quickly. It is a neutral and accessible site that will provide real-time aggregate reporting and status updates,” said Faith Schwartz, HOPE NOW executive director. “While we will initially roll it out with certified housing counselors, our goal in the upcoming year is take it directly to consumers.”

The intention of the new HOPE LoanPort is to streamline the HAMP application process by leveraging HUD counseling agencies that provide free services to at-risk borrowers. Housing counselors in nine key markets will assist troubled homeowners in collecting all required documents for a loan modification under the Making Home Affordable program.

Over 650,000 borrowers are currently in the trial modification process, but HOPE NOW said many of these borrowers have not submitted the required documentation to make the modification final. Created in an effort to help address some of the hurdles borrowers face when seeking a HAMP modification, the HOPE LoanPort will allow counselors to help with the collection of necessary documents from homeowners, upload the completed package directly to servicers, track the status of a borrower’s application, and provide homeowners with regular status updates.

“This new web portal will help homeowners get a faster answer, via their housing counselor, on whether or not they qualify for a HAMP loan,” Schwartz said. “The ability to help at-risk borrowers navigate more quickly through the HAMP modification process is a win-win for borrowers and the servicers committed to this program.”

Through its use of available, secured technology and standardized application forms, Schwartz said the HOPE LoanPort will make a difference in the amount of time it takes for a consumer to get the answers they are seeking and reduce costs to servicers. Additionally, HOPE NOW believes this new web portal will help the industry and the government better understand where the problems are in the application process. By identifying these problems, steps can then be taken to address them.

“This initiative reflects the tremendous collaborative effort the mortgage industry is conducting to create additional channels to assist borrowers and counselors in pursuit of HAMP modifications,” said Camillo Melchiorre, SVP of loss management for Radian Guaranty, a sponsor of the pilot program.

As part of the HOPE LoanPort, NeighborWorks America and its affiliated agencies along with HomeFree USA and its affiliates will serve as counseling intermediaries. The mortgage servicers initially participating in the new web portal include American Home Mortgage Servicing, Inc., JP Morgan Chase Manhattan, GMAC Financial Services, SunTrust, PNC Mortgage, and Saxon Mortgage. At-risk borrowers who have a loan with one of these six servicers are encouraged to contact the appropriate approved counseling agency to get help.

“Housing counselors have consistently articulated the need for a single point of entry and systematic process for communicating with servicers,” said Ken Wade, CEO of NeighborWorks America. “We are delighted that HOPE NOW has developed HOPE LoanPort, which will improve the efficiency and effectiveness of counseling and enable more distressed homeowners to receive the assistance they need.”

Article Source: DS News

WASHINGTON – The U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) today kick off a nationwide campaign to help borrowers who are currently in the trial phase of their modified mortgages under the Obama Administration’s Home Affordable Modification Program (HAMP) convert to permanent modifications. The modification program, which has helped over 650,000 borrowers, is part of the Administration’s broader commitment to stabilize housing markets and to provide relief to struggling homeowners and is a primary focus of financial stability efforts moving forward. Roughly 375,000 of the borrowers who have begun trial modifications since the start of the program are scheduled to convert to permanent modifications by the end of the year. Through the efforts being announced today, Treasury and HUD will implement new outreach tools and borrower resources to help convert as many trial modifications as possible to permanent ones.

“We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowners,” said the new Chief of Treasury’s Homeownership Preservation Office (HPO), Phyllis Caldwell. “We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.” In her new role, Caldwell will lead HPO’s conversion drive efforts.

“Encouraging borrowers to move through the process of converting trial modifications to permanent modifications remains a top

priority for HUD,” said HUD Assistant Secretary for Housing and FHA Commissioner David Stevens. “As a part of our continuing efforts to improve the execution of the HAMP program, HUD is committed to working with servicers, borrowers, housing counselors and others dedicated to homeownership preservation to improve the transition of distressed homeowners into affordable and sustainable mortgages.”

With tens of thousands of trial modifications being made each week, the Administration is now working to ensure that eligible borrowers have the information and the assistance needed to move from the trial to the permanent modification phase. (All mortgage modifications begin with a trial phase to allow borrowers to submit the necessary documentation and determine whether the modified monthly payment is sustainable for them.) As the first round of modifications convert from the trial to permanent phase, the Administration has identified several strategies for addressing the challenges that borrowers confront in receiving permanent modifications.

In addition to the conversion drive that kicks off today, the Obama Administration has already taken several steps to make the transition from trial to permanent modification easier and more transparent by:

Extending the period for trial modifications started on or before September 1st to give homeowners more time to submit required information;
Streamlining the application process to minimize paperwork and simplify the submission process; meeting regularly with servicers to identify necessary improvement to borrower outreach and responsiveness;
Developing operational metrics to hold servicers accountable for their performance, which will soon be reported publicly;
Enhancing borrower resources on the MakingHomeAffordable.gov website and the Homeowner’s HOPETM Hotline (888-995-HOPE) to provide direct access to tools and housing counselors.
The Mortgage Modification Conversion Drive will include the following:

Servicer Accountability. As part of the Administration’s ongoing efforts to hold servicers accountable for their commitment to the program and responsibility to borrowers, the following measures will be added:
Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers. Treasury/Fannie Mae “account liaisons” are being assigned to these servicers and will follow up daily as necessary to monitor progress against the servicer’s plan. Daily progress will be aggregated by the end of each business day and reported to the Administration.

Servicers failing to meet performance obligations under the Servicer Participation Agreement will be subject to consequences which could include monetary penalties and sanctions.

The December MHA Servicer Performance Report will include the data on permanent modifications as well as the number of active trial period modifications that may convert by the end of the year if all borrower documents are successfully submitted, sorted by servicer and date.

Servicers will be required to report to the Administration the status of each modification to provide additional transparency about situations where borrowers face obstacles to moving to the permanent phase.

Web tools for borrowers. Because the document submission process can be a challenge for many borrowers, the Administration has created new resources on www.MakingHomeAffordable.gov to simplify and streamline this step. New resources include:
Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps;

Comprehensive information about how the trial phase works, what borrower responsibilities are to convert to a permanent modification, and a new instructional video which provides step by step instruction for borrowers;

A toolkit for partner organizations to directly assist their constituents;

New web banners and tools for outreach partners to drive more borrowers to the site and Homeowner’s HOPETM Hotline (888-995-HOPE).

Engagement of state, local and community stakeholders. Through the conversion drive, the Administration is engaging all levels of government – state, local and county – to both increase awareness of the program and expand the resources available to borrowers as they navigate the modification process.
HUD will engage staff in its 81 field offices to distribute outreach tools. HUD will also encourage its 2700 HUD-Approved Counseling Organizations to distribute outreach information to participating borrowers.

By engaging the National Governors Association (NGA), National League of Cities (NLC) and National Association of Counties (NACo) the Administration is connecting with the thousands of state, local, and county offices on the frontlines in large and small communities across the country who are hardest hit by the foreclosure crisis. These offices will now have the tools to increase awareness of the program, connect with and educate borrowers and grassroots organizations on how to request a modification and take the additional steps to ensure they are converted to permanent status; and serve as an additional trusted resource for borrowers who are facing challenges with the program.

In partnering with the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, state regulators will now have enhanced tools to assist borrowers who are facing challenges in converting to a permanent modification and to report to the Administration on the progress and challenges borrowers and servicers are facing on the ground. Regulators will also be empowered to work directly with escalation and compliance teams to ensure that HAMP guidelines are consistently applied.

More information about the Obama Administration’s mortgage modification program can be found at www.MakingHomeAffordable.gov.