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Banks' Slowdown on Mortgage Aid Hurts Borrowers, Audit Says

bloomberg.com | July 31, 2014

By Clea Benson

Lenders aren’t keeping pace with a mounting backlog of applications for federal mortgage aid, placing some borrowers at increasing risk of losing their homes to foreclosure, according to an auditor’s report.

Servicers including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ocwen Loan Servicing LLC are processing only a fraction of the applications they receive each month for the Home Affordable Modification Program, the Special Inspector General for the Troubled Asset Relief Program said today.

“Without a timely review of their eligibility to even get into a HAMP trial modification, struggling homeowners left in limbo hoping to get help from TARP’s HAMP program may not pursue other foreclosure alternatives and, with options narrowing over time, may be at risk for foreclosure,” the report said.

The number of borrowers waiting for a response to their requests for HAMP aid rose 65 percent between November and May, to 221,000, which the report called “an alarming trend.”

Ocwen (OCN), with the largest pool of 61,000 unprocessed applications, “will face significant challenges” processing its “massive backlog,” the report said.

In statement issued by Ocwen spokeswoman Margaret Popper, the company said its own data differs from what was used in the inspector general’s report.

“We have reached out to the U.S. Treasury officials administering the HAMP program to ensure data reporting is truly apples-to-apples going forward,” the company said in the statement.

The report also singled out JPMorgan, CitiMortgage, and Select Portfolio Servicing Inc. for processing speeds that could keep borrowers waiting for months. Homeowners are supposed to receive a response within a month of submitting their paperwork.
Critical Reports

The report was the latest in a series of TARP inspector general audits critical of the HAMP program, which pays banks to modify mortgages and lower borrowers’ monthly payments. The program, a centerpiece of President Barack Obama’s efforts to stem the housing crisis, was funded under the 2008 TARP program.

Prior audits have questioned the high rate of redefaults by borrowers who’ve received mortgage modifications through HAMP.

“SIGTARP has reported on many occasions that Treasury can and should do more to hold servicers accountable, and this is just one more example,” the report said.

Servicers have given 1.4 million permanent mortgage modifications to borrowers during the five years of the program while rejecting more than 5.5 million applications, the report said.

The Treasury Department has been “working with servicers and other stakeholders over the last several months to get a better understanding of underlying causes of trends noted in our monthly program data,” Tim Bowler, the acting assistant secretary for financial stability, said in a statement.

“Treasury remains committed to maintaining the standards HAMP has set while the industry implements new servicing regulations so that those households facing a hardship receive the best and most timely outcome,” he said.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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