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Tuesday, April 30, 2013

HAMP: Fewer Borrowers Offered Loan Modification Relief in 2013 (monthly average)

HAMP: Fewer Borrowers Offered Loan Modification Relief in 2013, Compared to Average Month in 2012


The Home Affordable Modification Program (HAMP) is part of the Federal Government's Making Home Affordable (MHA) program. (No, I don't know why HAMP includes "Program" as part of it's title and the "Making Home Affordable" program does not.)  The way it works, in part, is that eligible borrowers are offered a "trial period", intended to last for 3 months. If the borrower complies with the rules during the trial period, the borrower is supposed to be given a permanent mortgage loan modification. Brief commentary: mortgage loan servicers, such as Bank of America, Citi, GMAC / Ally Financial, Wells Fargo, Bayview Loan Servicing, etc. improperly deny the mortgage relief / loss mitigation applications made by borrowers on a regular basis - I have direct first hand knowledge of that, having had to force these servicers to correct their "mistakes" on many occasions.


The sharp decline in early 2013 - new trial modifications reported down almost 30% - is extremely worrisome. Many of us worry that this will contribute to an increase in foreclosures in 2013, despite other indications that the market may be turning the corner.


Mortgage Loan Modification


New trial modifications reported in January and February, 2013 totaled 24,575, for an average of 12,287.5. This is lower than the monthly average for 2012. By way of interesting comparison, 34,621 new  trial modificationsn were reported in November and December, 2012, a monthly average of 17,310.5. The reduced number of business days in November and December likely impacts those figures; one would expect fewer new modifications from November through January, and possibly February - but this would not account for the difference between late 2012 and early 2013.


I believe that one reason for this reduction in modifications being offered is the confusion and delay which is being caused by the staggering amount of loans which are being sold off and/or having the servicing rights transferred. For example, we have many clients whose loans have been transferred from Bank of America to Bank of New York, Aurora, Bayview, NationStar, etc. in recent months. In almost every situation, the transfer has caused significant delays and roadblocks in the loss mitigation process. In fact, this selling off of loans has been so voluminous, and unusual, that the Consumer Financial Protection Bureau has issued formal notice that it will be closely monitoring the situation.


 McGrath & Spielberger, PLLC is a private law firm which provides assistance to those involved in mortgage disputes, including borrowers in need of mortgage relief services such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.