RealEstateEconomyWatch.com

MHA_public_report.pdf

“Uneven” is a popular word in Washington.  It means things aren’t good, but it doesn’t let on just how bad they might be.  Best of all, it conveys none of the emotion that normal people use in their daily speech. 

 ”The data show that servicer performance has been uneven,” said the Treasury news release accompanying the first monthly report card on the Making Home Affordable loan modification program, which was released today (see file above.)

Uneven indeed.  Two of the largest banks on the planet, Bank of America and Wells Fargo, have initiated a smaller percentage of trial modifications among their eligible borrowers than such household names as Residential Credit Solutions or Saxon Mortgage Services.  Under the program, modifications must undergo a trial period of at least three months of current payments before the loan modification is complete.

Among the large banks, others fared better.  JP Morgan Chase has 20 percent of its eligible borrowers in trial mods.  Citimortgage, 15 percent.  GMAC, 20 percent. 

Not all the little guys have their acts together.  American Home Mortgage Servicing, with 153,097 eligible borrowers in default, has yet to ask even one of them if they would like to participate.  MorEquity, Inc., Home Loan Services, Inc. National City Bank, and RG Mortgage Corporation, all with more than 1,000 homeowners eligible for the program, have yet to get even one to the trial modification state. 

As pressure to produce results rises, some reports from the field suggest that the program is too complicated to implement quickly.  Last week, more than 20 top banking executives spent a day at the Treasury Department discussing such issues as the need for standardized forms, training, and above all, the strain the program is placing on their resources.

How is it, then, that Saxon Mortgage Services can process a quarter of its entire inventory when Bank of America can do only 4 percent of its?  The program is just as complex for Saxon as it is for BoA.

As fate would have it, today Fitch Ratings affirmed Saxon’s servicer ratings.  Its news release answers our question.  “Since Fitch’s prior review, the company has added significant capacity to its collections and loss mitigation staffing through outsourcing arrangements with two onshore business partners; enhanced its analytical capabilities for loss mitigation, foreclosure bidding instructions, and investor remitting; and implemented a proprietary application that calculates borrower eligibility for modification programs, including the Home Affordable Modification Program (HAMP). Saxon’s combined voluntary and involuntary turnover during the current review period was higher than average at 39%. However, the company attributed this to the implementation of an aggressive goals-oriented program for its servicing employees, which management believes will better position the company for future servicing opportunities.”

Sounds like Saxon’s management cares deeply about getting its troubled borrowers through the worst experience of their lives successfully with the help of the Federal program. 

 Meanwhile, borrowers with their mortgages at BoA, Wells and other lenders who got an F are still behind the eight ball four months after the program launched.  They live from day to day not knowing how long they will be able to keep their homes.  For them, the right word is not “uneven.”  It’s “unfair.”