From Treasury to Banks, an Ultimatum on Mortgage Relief

A recent article by Joe Nocera of the New York Times attempts why so many loan servicers are having difficulty getting up to speed with the Obama administration's Making Home Affordable program:

“Servicers are just not equipped to do this,” said William Kelvie, the chief executive of Overture Technologies, a company that sells underwriting software. If you want to understand why loan modifications have been so slow in coming, that’s a pretty good place to start.

For most of its history, the mortgage servicing industry — which is dominated by big banks like Bank of America, Wells Fargo, and JPMorgan Chase — did relatively simple tasks: it collected mortgage payments, paid taxes on the properties and so on. Yes, it dealt with borrowers who were in arrears — which usually amounted to no more than 2 or 3 percent of their portfolio at any one time — but mainly it either prodded people to get current on their payments or initiated foreclosure proceedings.

Modifying loans — thousands upon thousands of loans, amounting to as much as 25 percent of a servicer’s portfolio — is a much more complex task. For some servicers, the sheer numbers can “overwhelm the system,” said Larry B. Litton Jr., the chief executive of Litton Loan Servicing, which is owned by Goldman Sachs and which has long specialized in loan modifications. That is at least part of the reason why borrowers are having so much trouble getting their servicers to take their calls: many servicers can’t cope with the volume.

More important, loan modification requires a lot of work. They can’t be done in a blanket, one-size-fits-all fashion. Rather, loan modification is a one-on-one process that requires servicers to do something that should have been done in the first place: actually underwrite the loan.

The full article is available here

White House Prods Banks

Letter Tells Chiefs To Start Backing Mortgage Relief

July 10, 2009, by Renae Merle, Washington Post Staff Writer

The Obama administration yesterday scolded the heads of the country's largest banks, urging them to move faster and do more to help millions of distressed homeowners under a federal foreclosure prevention program.

In a two-page letter, Treasury Secretary Timothy F. Geithner and Shaun Donovan, secretary of the Department of Housing and Urban Development, acknowledge that the government program, known as Making Home Affordable, has yet to gain traction since being launched in March.

"We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," the letter said. more ...

CNNMoney.com interviews executive director of Hope Now

CNNMoney.com interviews Faith Schwartz, Executive Director of Hope Now, a coalition of servicers, community groups and mortgage investors working to stem foreclosures.

Wisconsin-based information management company offers new loan servicing software designed around Making Home Affordable

BROOKFIELD, Wis. - (Business Wire) Fiserv, Inc. (NASDAQ:FISV), the leading global provider of financial services technology solutions, announced today its Loan Servicing Platform, with extensive loan modification and loss mitigation features, is fully compatible with new guidelines from the U.S. Treasury Department on home loan modifications. In fact, from its inception the Fiserv platform was the first loan servicing system that was fully capable of supporting the Making Home Affordable Modification program.

As part of the Obama administration’s initiative, the U.S. Department of the Treasury created the Home Affordable Modification Program (HMP) as part of the Making Home Affordable program. Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, were named as the administrators of the HMP. Designed to help as many as three to four million distressed homeowners avoid foreclosure by modifying loans and monthly mortgage payments to an affordable level, the program provides clear and consistent guidelines that the mortgage industry must follow.
The Loan Servicing Platform is an example of Fiserv’s processing services core competency and utilizes integrated default management tools that allow servicers to track and study the loans being modified. With this knowledge, servicers can formulate best-option workout scenarios based on operational business rules while meeting HMP guidelines.

Read full press release