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Moody’s: Citi, GMAC, Ocwen Perform Well

Amid a challenging environment for servicers, ""CitiMortgage"":https://www.citimortgage.com/Mortgage/Home.do?td, ""GMAC"":http://homeloans.gmacmortgage.com/j/i/39529/Mortgage.html?CP=ppc_brd_g&gclid=CIes_L2t8KsCFZFY7AodhDoFUA, and ""Ocwen"":http://www.ocwen.com/ have outperformed major competitors - ""Bank of America"":https://www.bankofamerica.com/ and ""Chase"":https://www.chase.com/ - with regards to loss mitigation and foreclosure timelines, according to a recent report from ""Moody's."":http://www.moodys.com/

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Moody's Investor Service's Servicer Dashboard for the second quarter of 2011 rates major servicers for their performance over the year from June 2010 to June 2011.

Bank of America's and Chase's performances were affected by large servicing acquisitions and foreclosure moratoria resulting from robo-signing investigations, according to Moody's.

Moody's Current to Worse Roll Rate measures the percentage of loans that start the year in current status and end the year delinquent, in default, or in foreclosure.

At 4.3 percent, CitiMortgage ranked best for Current to Worse Roll Rate for jumbo loans, a sign of their ""working with imminently defaulting borrowers prior to delinquency and their use of short-term loss mitigation programs for borrowers in early stages of delinquency,"" according to the report.

GMAC ranked first for both ALT-A and subprime loans, and Wells Fargo ranked second in Current to Worse Roll Rate for jumbo, ALT-A, and subprime loans.

""Wells has strong staffing ratios, allowing them to manage large volumes of loans and reduce the number of current loans that slip into distress,"" states the report.

BofA ranked fourth for all three loan types, and Chase fell into last place for all three. The Current to Worse rates were highest for subprime loans â€" 25.8 percent of Chase's current subprime loans were delinquent, in default, or in foreclosure, while 21.7 percent of BofA's subprime loans fell into one of these categories by year-end.

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Moody's attributes these rankings to both bank's servicing portfolio acquisitions.

In terms of curing default, Citi, GMAC, and Ocwen performed well. Moody's notes that Citi and Ocwen both have their own default servicing systems with modification programs, which allow them to modify loans for more borrowers.

Moody's also points to Ocwen's and GMAC's low modification re-default rates, which it attributes to the fact that these banks have consistently verified borrowers' financial information before allowing them to enter trial modification periods.

As with Current to Worse rates, Chase and BofA showed a weak performance in loss mitigation.

Moody's was not the first to note shortcomings in BofA's and Chase's loss mitigation efforts. When the Treasury scored servicers for their HAMP performance, the only two servicers categorized as needing ""Substantial Improvement"" for both the first and second quarters of this year were Chase and BofA.

Moody's attributes this low performance level to the banks' recent acquisitions. ""Integration of separate loss mitigation operations, including employees, strategies, processes and technologies, severely limited the volume and success of loss mitigation workouts,"" Moody's states.

Results for the number of days from a foreclosure referral to a foreclosure sale were somewhat mixed.

Wells Fargo posted the shortest timeline among jumbo loans; Citi barely beat Chase for the lowest number of days for ALT-A loans, and Ocwen performed best among subprime loans.

Moody's notes that Wells, Citi, and Ocwen did not impose foreclosure moratoria during the period, while BofA, Chase, and GMAC did â€" leading to lengthened foreclosure timelines.

While ""[s]ervicers have made significant headway addressing the foreclosure documentation execution concerns related to the robo-signing issue,"" Moody's predicts that ""we will continue to see the impact of robo-signing on foreclosure sale timelines over the rest of the year.""

Moving forward, Moody's predicts implementing the required single point of contact for borrowers in the loss mitigation process will impact servicing performance as it calls for significant organizational and operational changes.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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