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Ocwen Converts 83% of HAMP Trials to Permanent Modifications

Subprime mortgage servicer ""Ocwen Financial Corporation"":http://www.ocwen.com has converted the highest percentage of trial loan modifications for distressed homeowners to permanent status under the administration's Home Affordable Modification Program (HAMP).

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According to the Treasury's ""just-released HAMP report"":http://dsnews.comarticles/hamp-servicers-put-nearly-300000-in-permanent-mods-2010-05-17 on servicer performance, 83 percent of the Florida-based company's customers who had trial modifications through the federal program have now been moved into permanent modifications.

Borrowers in permanent HAMP mods are receiving median payment reductions of 36 percent, more than $500 per month, according to data from the Treasury.

One other company, ""HomEq Servicing"":http://www.homeq.com, also converted 83 percent of its trials to permanent status. As ""DSNews.com previously reported"":http://dsnews.comarticles/hamp-servicers-put-nearly-300000-in-permanent-mods-2010-05-17, the nation's four largest banks have conversion rates below 30 percent.

Ocwen attributes its conversion success in part to its established practice of requiring verified documentation from borrowers before putting them in trial modifications. Many servicers have relied simply on stated income for trials.

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Treasury recently announced that beginning June 1, all HAMP servicers must obtain proper documentation and verify borrowers' income upfront, prior to initiating new trial modifications. Administration officials say this procedural change will significantly speed up the timeline for converting trial plans to permanent restructurings.

Commenting on the company's position at the top of the conversion chart, Ocwen President Ronald M. Faris, said, ""We are doing everything we can to help make the HAMP program a success. Loan modifications are the best solution for helping American families avoid foreclosure, but modifications have to be sustainable, rigorously formulated, and effected on a meaningful scale. We're gratified that the Treasury has recognized that our upfront documentation approach, while process-intensive, benefits homeowners and the program -- and that approach is now required of all HAMP servicers.""

According to Faris, Ocwen's success with modifications also stems from its 30-year track record servicing high-risk loans, as well as the firm's proprietary technology that allows it to modify mortgages for distressed homeowners so they're affordable on a sustainable basis while still delivering more cash flow to investors than they would get from a foreclosure.

Ocwen has invested over $100 million in research and development to build loan servicing technology that is scalable for high volumes. The firm also cites its reliance on consumer behavioral science research and long-standing partnerships with grassroots consumer advocacy groups as instrumental in enhancing borrower outreach and effective communications.

Since the onset of the mortgage crisis, Ocwen says it has saved more than 100,000 homes from foreclosure. In doing this, Ocwen has partnered with community groups around the country to reach out to, educate, and provide services for customers in distress and at risk of foreclosure.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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