Ocwen Financial (OCN) and HomeEq Servicing converted 83% of trial modifications under the Home Affordable Modification Program (HAMP) into permanent status, tying for the highest rate of any participating mortgage servicer. The Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. Through April 2010, the servicers have provided nearly 300,000 permanent modifications and started 1.2m three-month trials. Borrowers must make three monthly payments during the trial period before receiving the permanent modification. Servicers give a median price reduction of 36%, saving more than $500 a month. “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,” said Ronald Faris, president of Ocwen. Faris said the high conversion rate is due to its experience in servicing high-risk loans and the $100m spent in research and development in loan servicing technology. Ocwen even devoted some investments into consumer behavioral science research. Ocwen holds more than 27,000 HAMP-eligible loans in its servicing portfolio, and has offered more than 23,000 trial period-plans. Of those, 19,000 trials have started with 12,000 modifications in permanent status. HomeEq holds 16,000 HAMP-eligible loans and has extended 5,500 trial offers. The servicer has converted more than 2,200 trials into permanent status. A spokesperson for HomeEq said the numbers speak for themselves and declined to comment further. By comparison, the big-four banks all held conversion rates in the same range. Bank of America (BAC) and Wells Fargo (WFC) both converted 25% of their trial modifications into permanent status. JPMorgan Chase (JPM) converted 22% of its trials, and the Citigroup (C) servicing arm CitiMortgage had a 21% conversion rate. It should be noted that those banks hold hundreds of thousands of HAMP-eligible loans in the portfolios, compared to the smaller amounts for Ocwen and HomeEq. But Ocwen, at the outset of HAMP, would not move a borrower into a trial modification until it received all of the documentation. More than 227,000 trial modifications were canceled for the entire program when the servicers found the borrower ineligible for a permanent modification or the borrower missed a payment. In January, the Treasury forced all servicers to collect documentation before the trial stage by June 1, 2010. “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,” Faris said. Write to Jon Prior.