Housing counselor: Mortgage servicers 'routinely and blatantly ignore HAMP guidelines'
Baltimore resident Michael F. Molloy's letter about a relative's struggles to get a loan modification prompted a lot of comments from readers and full-fledged commentary from a foreclosure-prevention counselor at St. Ambrose Housing Aid Center in Baltimore.
Counselor Bryan Sheldon argues: "It's not that there aren't programs available to assist most homeowners. The problem is that servicers and investors have no real need to follow program guidelines or assist borrowers in default."
The Obama administration's HAMP loan-modification program has been roundly criticized for the low number of homeowners assisted, but Sheldon contends that "many more may have been helped if mortgage servicers did not routinely and blatantly ignore HAMP guidelines."
Other links that might catch your interest:
The Center for Responsible Lending says it ran simulations of the foreclose-or-modify test used by servicers and determined that investors really do make out better with modifications, even though servicers -- who are supposed to be acting in investors' interests -- overwhelmingly opt to foreclose.
A Georgia jury awarded $21 million in damages to an Army staff sergeant who contended that a servicer hurt his credit by reporting him late on payments that it hadn't properly credited him for. The servicer, calling the award "grossly disproportionate to any damages ... sustained," promised to appeal. (Hat tip to the Consumerist for noticing this.)
And on a (slightly) more lighthearted note: Foreclosure buyers hire witches to cleanse properties of "bad vibes" (The Wall Street Journal)
Categories: Links, links, links, The foreclosure mess
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Comments
Thank you for bringing attention to the great need for the U.S. Treasury to enforce servicer compliance with HAMP guidelines. HAMP loan modification guidelines are based on affordability of the loan to the borrower, and, therefore, are usually the best option for the consumer -- a choice that is too frequently NOT made available to them by their servicer. Some in Congress are threatening to eliminate HAMP. However, HAMP can work very well for the consumer if only the Treasury would assure that servicers follow its guidelines.
Carol Gilbert
Assistant Secretary
MD Dept. of Housing & Community Development
Posted by: Carol Gilbert | March 24, 2011 3:19 PM
At least a year and a half ago I was giving a presentation on HAMP to homeowners. One of the attendees asked me if lenders really did apply the guidelines I had outlined.
I thought a minute, and told him, "I'll tell you the truth, no they have not." The success rate had been disappointingly low because the lenders were not following through." I explained the measures Treasury had recently announced to improve things, such as placing Treasury employees in the major lenders to see that they were following policy, and that borrowers could call MHA Help and a person working for Treasury could follow up on the status of their specific case.
It is disappointing that things do not seem to have improved.
Posted by: Jim Kelly | March 24, 2011 3:24 PM
Mortgage servicers 'routinely and blatantly ignore HAMP guidelines',
GOOD!
Put this ridiculous waste of taxpayer resources out of its misery along with all the other failed programs- cash for junk, tax rebates, mortgage mod.
Stop wasting the taxpayer money on people who have proven they cant manage their finances. Spare me your anecdotal hardship stories.
Put that money back to work by investing in education. Teach a man to fish.
Posted by: elweedz | March 24, 2011 8:01 PM
I'm pretty sure HAMP is a voluntary program. The servicer and investor will ALWAYS do what's in their best interest first. If that means choosing foreclosure over modification, that's what will happen. If this were a mandatory program, which it's not, it would become a law and not a program. Most of these mortgages have insurance so they get the full amount regardless what they sell for.
Posted by: Frank Rizzo | March 25, 2011 6:51 AM
Frank,
HAMP is voluntary in the sense that the servicers got to choose whether to sign a contract with the government to participate for loans that are not owned by Fannie or Freddie. If they sign that contract--and most of them did--they have to comply with the program guidelines in exchange for incentive payments on modified loans. So, complying with the program guidelines is in fact mandatory for Bank of America, Wells Fargo, Chase, Citi Mortgage, Flagstar, AHMSI, Ocwen, IndyMac, Saxon, Select Portfolio, etc.
If a loan is owned by Fannie or Freddie, it is not voluntary in any way. So, even if they don't sign the contract, if they service a Fannie or Freddie loan, they have to do HAMP for those loans.
Posted by: Marduk | March 25, 2011 8:36 AM
I enjoyed the article about the witches used to clean the negative energy! Very amusing.
Thanks!
Posted by: pigtown girl | March 25, 2011 12:03 PM
I think this Sheldon fellow is way out of line
Posted by: Teddy Lawzinsky | March 28, 2011 10:17 AM