375,000 HAMP Trials to Go Permanent, Treasury Says
The US Treasury Department and the Department of Housing and Urban Development (HUD) launched a campaign to convert more trial modifications under the Home Affordable Modification Program (HAMP) into a permanent status. Under HAMP, the Treasury allocates capped incentives to participating servicers for the modification of loans on the verge of foreclosure. According to the latest report, more than 650,000 trials modifications are underway. Saxon Mortgage Services leads all servicers by providing trials to 44% of its eligible portfolio, according to the report. More than 375,000 borrowers are on track for a permanent modification by the end of the year, according to Michael Barr, assistant secretary for financial institutions at the Treasury. “We remain highly focused on getting these families to a permanent mod. It’s up to the banks to do their part. They have not done a good enough job in getting borrowers into permanent modifications,” Barr said, echoing comments made over the weekend. He added that servicers shown to be underperforming in the December report on permanent modifications could expect serious consequences though he would not give specifics. Phyllis Caldwell, the new chief of Treasury’s Homeownership Preservation Office (HPO) said that the top eight servicers sent specific plans to convert more trials into a permanent modification. Missing documentation continues to plague the conversion rate. Caldwell said that 37% of borrowers in a trial have submitted some documents, while 20% have sent in nothing to the servicer. The rest, she said, had provided all required documents and are waiting on the banks to convert their modification. Throughout December, Caldwell said, the servicers will report to the Treasury twice a day with updates on their conversion efforts. “We will be sending SWAT teams to these shops to help,” Caldwell said. The “SWAT teams” refer to the account liaisons from the Treasury and the mortgage giant Fannie Mae (FNM), which will be assigned to the servicers to monitor progress and report back to the Administration. Servicers that do not meet the obligations under the servicer participation agreement with HAMP will be subject to monetary penalties and sanctions. Write to Jon Prior.