Bank of America, Wachovia, Wells Fargo HAMP Modification Performance Evaluated
August 9, 2009
The Making Home Affordable Plan has released its August 2009 Servicer Performance Report. The report analyzes the progress of the HAMP mortgage modification program.
The Data
To date, Bank of America modified just 4 percent of eligible loans. Wells Fargo has modified 6 percent.
Wachovia Corp. has modified a mere 2 percent of eligible loans. (Wachovia was taken over by Wells Fargo in December 2008.)
Several servicers- each of whom received significant amounts of TARP funds– report modifying ZERO mortgages.
Wachovia / Wells Fargo’s Response
Mike Heid, co-president of Wells Fargo’s mortgage unit, told MSNBC the company tries to sign up most homeowners with one phone call. Heid claims Wells Fargo then sends eligible homeowners a trial offer within two days. http://www.msnbc.msn.com/id/32281959/ns/business-real_estate/from/ET/
The Reality
This, however, is in marked contrast to what our office has heard from homeowners. Many homeowners come to us for help after trying for several months to work with their servicers directly.
Homeowers report that Wachovia and Wells Fargo have consistently failed to process modification request packages.
Once contacted by the homeowner for follow-up, the servicers claim additional documentation is needed– even though the homeowner already submitted all documentation the servicer requested.
However, the servicers do not attempt to notify the homeowners they need additional information. So, the files sit untouched until he homeowners contact the servicer to find out what is going on.
Weeks might go by before a homeowner discovers his or her file has been idle. But, time is obviously of the essence for people trying to avoid foreclosure.
What can be done?
The HAMP incentives were meant to discourage this kind of inefficiency. But apparently the incentives are not working.
As a side note, it does not seem possible the servicers are fulfilling their duty to their shareholders by leaving so much incentive money on the table. Recall the HAMP incentives pay servicers for every loan they modify while the loan is still current.
Our office would like to see some HAMP guidelines that would put a time limit on servicers’ processing, at least for Fannie- and Freddie- owned or guaranteed loans.
A guideline requiring the servicers to notify homeowners when they need additional information would be helpful as well.
What does this mean for homeowners?
If you plan to request or already have requested a HAMP modification:
- Start early. You should request a modification even before your mortgage is delinquent. Maybe you are current now, but you have had a reduction in income due to a layoff. If you qualify for a modification, apply. It will take a very long time for the paperwork to be processed. By the time you are in true crisis, hopefully your request will have been processed. But see below.
- Call your servicer at least weekly to ask the status of your file and whether you need to provide additional information.
- If your servicer seems to be making up requirements as it goes along, check to see if it is complying with the HAMP guidelines in its handling of your file. There have been many reports of homeowners being rejected for HAMP modifications for reasons not permitted under the HAMP guidelines. In fact, Freddie Mac has announced it will start auditing servicers for compliance with the HAMP guidelines.
- File a complaint with Freddie Mac if your servicer seems to be violating the HAMP guidelines and your loan is a Freddie Mac loan.
- File a complaint with the Department of the Treasury if you think your servicer has violated HAMP guidelines in processing your file.
To learn more, see these links:
The Making Home Affordable Servicer Performance Report August 2009
MSNBC: Mortgage modifications moving at snailÂs pace
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