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13.9% of Ocwen's HAMP Modifications Complete Trial Stage
[Update 1 clarifies timeline of trial modification data] Of the total amount of loans converting from the Home Affordable Modification Program’s (HAMP) three-month trial period into permanent modification status, Ocwen Loan Servicing’s modifications counted for nearly half. Ocwen Loan Servicing is the principal subsidiary of Ocwen Financial Corp. (OCN). Through HAMP, the US Treasury Department allocates capped incentives to servicers for the modification of distressed loans and adjusts those caps based on performance. According to a report from the Congressional Oversight Panel (COP), HAMP servicers converted 1,711 loans , or 1.26% of the trials, into a permanent modification since the program’s launch in March 2009 to September 2009. In order for a servicer to convert a modification into permanent status, the servicer must gather and verify all documentation required of the homeowner under HAMP and receive three payments on the modification for three months. Ocwen converted 763 trial modifications, or 13.9% of all its trials, into permanency, which is 44.6% of HAMP’s total as of September 1, according to a release. "Our technology and analytics-based approach to prudent modifications is paying off, as shown by the proportion of permanent HAMP modifications completed for Ocwen customers,” said Ocwen president Ronald Faris. “We believe it's better for our business, and better for struggling homeowners, for us to do the difficult, detailed re-underwriting work up front. We're committed to modifications that stick; those are the ones that help homeowners for the long run, mitigate the mortgage crisis and, importantly, generate incremental revenue for our shareholders.” Through August 2009, Ocwen started 4,785 trial modifications, or 8% of the 57,203 in its total eligible portfolio, according to the September 9th HAMP progress report released by the Treasury. HAMP reached a milestone last week, when servicers started 500,000 trial modifications one month ahead of its goal set in July. Write to Jon Prior.