Study: Banks' incompetence thwarted 800,000 loan mods
Servicers' failure to improve staffing means that HAMP helped far fewer borrowers avoid foreclosure than it could have, researchers find.
The big banks could have prevented 800,000 foreclosures if they had handled homeowners' applications competently, according to a new study.
The federal government's Home Affordable Modification Program is on track to modify about 1.2 million loans by the end of this year. But if loan servicers had hired more and better-trained staff, HAMP could have helped an additional 800,000 homeowners, the study says.
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Since the government rolled out its first foreclosure-prevention programs, borrowers have complained about the difficulties of dealing with loan servicers: The banks lose documents, ask for the same data over and over, fail to respond to borrowers and otherwise make receiving any sort of loan modification an arduous bureaucratic process.
The study found significant discrepancies in the way banks' loan-servicing arms handled modifications. As Bloomberg notes, some lenders converted 80% of trial modifications into permanent modifications while others converted as few as 30%. And, added Pro Publica, quoting from the report, a “few large servicers [have offered] modifications at half the rate of others."
The study found that the financial incentives offered to the banks by HAMP were not enough to propel them to hire more and better staff. Bloomberg wrote:
The researchers did find strong correlation between a servicer’s success with HAMP and the operational skill it had before the program was introduced. Banks that previously had fewer loans per employee, more training for staff and shorter wait times for phone calls took far more advantage of HAMP. Banks with weaker infrastructure previously — mostly the largest servicers — didn’t take up the program en masse relative to the size of their portfolios.
The report does not identify which banks were guilty of poor performance with HAMP, "but it's not hard to ID them," writes Pro Publica, which has done extensive investigative reporting on the foreclosure crisis. It lists the largest mortgage servicers as Bank of America, JPMorgan Chase, Wells Fargo and Citi.
The study's authors write: "If these worse-performing banks had simply modified loans at the same pace as their better-performing peers, then HAMP would have produced about 800,000 more modifications. Instead of about 1.2 million modifications by the end of this year, HAMP would have resulted in about 2 million."
What a joke, Mortgage modifications, a pipe dream that our great president dreamed up to "help" people keep their homes. The part thats missing is the part where the banks we all bailed out with tax dollars give a crap about helping.
4 months ago I applied to Bank of America because i'm in trouble financially.Upon reading the guide line I felt I qualified. My paper work has been kicked back 3 times for trivial things and they even LOST paper work I mailed to them in a fed ex mailer they provided.After they lost my paper work they stopped processing my request.After 3 months of begging them to return phone calls for clarification on things theysaid were wrong I still have nothing done. They act like I'm the problem, they keep asking me to re-submit paper because its "out of date", nothings changed, and their the one dragging their feet and making it go "out of date"
NOW they seem to think they have everything they need from me, and would'nt you know it, they sold my mortgage to another servicer. The letter I got from bank of america sttes the new mortgage company will pick right up where we left off and finish my modification. A quick call to my new mortgage company about this got anice chuckle from the person on the phone. My new company said they never use old paper work, so I will have to start all over again with them. Bank of America is now a lier along with being crooks. where are our law makers, how do they get away with lieing to us all? do any of you law makers care that banks took our tax money to save their own a$$es then cheat us all??
There NEVER was any mention of any PRINCIPAL REDUCTION !!
Principal reduction is a MYTH. It never happened.
Give his staff raises?
Start the bullet train, nobody wants.
WHY havent' more folks complained about NO PRINCIPAL REDUCTION ??
They are still screwing us - USA needs an even stronger Financial Bill. For example, Bank of America tried to put the $5 fee on online transaction; more tries will follow. Meanwhile, the CEO is making over 8 Million Dollars a year! and he is laying off people.
Banks INCOMPETENCE?? I"M ROTFLMAO!
Yeah - they were incompetent alright:
*Incompetent enough to collect (through hook and crook) about a one trillion dollars in sub-prime loans.
*Incompetent in repeatedly "losing" paperwork many homeowners have been submitting ..... time and again and customers had to get on a robodial system in order to find a decent loan rate....IF they were lucky! Most of them got nothing and lost their home to foreclosure.
*Incompetent in that even after the Obama Affordable Homes Bill was implemented, it stayed stuck at the bottom of the banks' deck of options for refinance unless the homeowner had knowledge of it and demanded to take advantage of it.
Our banks are full of incompetence and excuses when it comes to its clients losing money......but they remain master-minds of earning money. Go figure!
US Government, take back the VA Housing loans from the banks and run the program yourself as was the orginal intention under the GI Bill of Rights.
The banks require a very good credit rating before they will lend Veterans the money to buy a house even though the US Government guarentees the loan, the GI Bill of Rights was to help Veterans get houses, it was because Veterans fought for there country NOT because they had a great credit rating, if Veterans had not gone to fight for their country they would have had good incomes and in turn good credit ratings so the GI Bill of Rights would not have been necessary.
Spell check states that there at two errors in spelling BUT it does not state which words are wrong, what use is spell check if it doesn't show which words are wrong!
Anybody out there know of a CLASS ACTION LAWSUIT to get our pincipal reduction promised by Obama's Making Home Affordable act??
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.