Tag Archives: Loan Modification

Mortgage servicing took center stage at a mortgage banking conference in Chicago on Monday, with industry experts making a case for reform. Panelists at a session on the future of mortgage servicing assured attendees that in five years, the servicing business ""will look nothing"" like it does today. Executives from such organizations as Freddie Mac, Amherst Securities, and the University of North Carolina advocated for national servicing standards, greater transparency, and new compensation structures.

Federal housing programs came under attack during a congressional hearing Thursday titled ""The Obama Administration's Response to the Housing Crisis."" Members of the Senate challenged witnesses with questions about the effectiveness of several programs, including the Neighborhood Stabilization Program and the Home Affordable Modification Program. Industry experts also discussed the potential of new initiatives, such as the REO rental proposal.

Treasury released a new progress report on its Home Affordable Modification Program (HAMP) Wednesday. The number of modifications granted continues to slip - fewer than 26,000 in August - but each month's results are chipping away at the pool of eligible borrowers who fit the HAMP criteria. Treasury's report comes just one day before a House subcommittee is scheduled to hold a hearing on the administration's response to the housing crisis, and one of HAMP's most outspoken critics is heading to Capitol Hill to testify.

Fannie Mae has opened up a new Mortgage Help Center in St. Louis, Missouri, to provide free education and counseling services to struggling homeowners. The St. Louis facility is the GSE's 11th Mortgage Help Center to open across the country. It was developed in partnership with the Urban League of Metropolitan St. Louis, local community and elected officials, and area mortgage servicers.

The current compensation structure for mortgage servicing needs to be revised so servicers' incentives will align with those of borrowers and investors, stated Federal Reserve Governor Sarah Bloom Raskin in a speech Tuesday. Raskin says it is imperative that servicers have adequate incentives to perform payment processing efficiently on performing mortgages, and to perform effective loss mitigation on delinquent loans. She also believes investors need methods to allow them to monitor servicer performance.

Mortgage servicer Residential Credit Solutions (RCS) stands out from the crowd in today's world of almost commonplace ratings downgrades and default servicing challenges. RCS has been awarded two upgrades from Fitch of its primary servicer rating for subprime products and its special servicing rating. Fitch said the rating actions reflect the company's 'high touch' servicing approach, competitive performance metrics, and effective default and foreclosure practices.

Data released Thursday by a federal banking regulator provides a snapshot of mortgage performance over the second quarter of this year. Both early stage and serious delinquencies increased slightly compared to the previous three-month period, as did completed foreclosures, while new modification actions fell nearly 20 percent. Perhaps the most troubling result in the report is post-modification performance. Of loans modified since the beginning of 2008, nearly half have since gone delinquent.

Wells Fargo says it will increase its commitment to credit counseling nonprofits by $5.4 million to a total of $12.4 million in 2011 - a 35 percent increase over the $9.2 million in 2010 - for national and local credit counseling agencies. The company notes that public funding for credit counseling is becoming more scarce, while demand for such services is growing. Wells Fargo's $5.4 million in new commitments this year will be provided in the form of grant money directly to nonprofit agencies and support foreclosure prevention counseling services and training.

Servicers completed about 56,000 proprietary permanent loan modifications in the month of August - similar to their July efforts. Most of these modifications included reduced principal and interest payments and fixed interest rates for five years or more, according to HOPE NOW data released Wednesday. While proprietary loan modifications remained level, foreclosure starts increased 18 percent, rising from 185,000 in July to 218,000 in August.

The Federal Housing Finance Agency (FHFA) is seeking public comment on two new compensation structures for mortgage servicing. The agency says the current model was not designed for today's market conditions. After meetings and discussions with various stakeholders, FHFA has put forth two alternatives. One proposal would establish a reserve account within the current servicing compensation structure. The other proposal would create a new ""Fee for Service"" model.