Treasury's raises more disagreements on HAMP
The Treasury Department disagreed with 4.2% of the troubled mortgages servicers chose not to put into the Home Affordable Modification Program the third quarter. The disagreements are on the rise, up almost a full percentage point from the previous period. According to a footnote in the February HAMP report, the Treasury's Making Home Affordable-Compliance team took second looks at roughly 100 loan files that did not reach HAMP. The team checks how the servicers have complied with the program guidelines, including the net-present-value decisions, where the servicer must determine if a modification benefits the investor more than a foreclosure. The Treasury did not immediately comment on the increase in disagreements. In addition to the loan-file reviews, the Treasury conducts inspections on-site to gauge how the mortgage servicers manage documentation, prepare for changes to the program and others. The team also reviews how borrower payments are being distributed to their principal for the largest servicers once a year. The most disagreements in the third quarter came from OneWest Bank and American Home Mortgage Servicing. However, the Treasury disagreed with 10% of both companies' decisions. "American Home Mortgage Servicing Inc.’s increasing trend of loans in the disagree category has been the subject of targeted followup; subsequent months have indicated improvement," the Treasury said in the report. The Treasury added that half of the disagreements they had with Litton Loan Servicing the quarter before were resolved once the servicer and borrower got in touch with one another. The Treasury requires servicers reevaluate loans it either disagrees with or cannot determine the results for. Often, the servicer is forced to submit more documentation to support the HAMP denial and will engage in remediating the action if it cannot. In the third quarter, the Treasury cleared 43% of the disagreements, and servicers were able to remediate 17% of them. Servicers participating in the program have started 633,000 permanent modifications since the program launched in March 2009 and has averaged roughly 28,000 permanent modifications each month over the last six months. Write to Jon Prior. Follow him on Twitter @JonAPrior.