LevonP
12-01-2009, 05:05 PM
The Obama administration vowed yesterday to shame lenders into moving faster to modify troubled home loans, bringing cheers from housing advocates and San Diego owners desperate to hang on to their homes.
The Treasury Department said it would start publishing this month which of the top 70 lenders and services are failing to permanently modify loans as promised. The department threatened sanctions and penalties if lenders fail to meet the participation agreements they signed with the federal government.
“We now must refocus our efforts on the conversion phase to ensure that borrowers and services know what their responsibilities are in converting trial modifications to permanent ones,” said Phyllis Caldwell, the department’s homeownership preservation chief.
Gabe del Rio, senior vice president of Community HousingWorks, a San Diego nonprofit advocacy group, said one-third of modifications under the Treasury’s program that his agency has arranged are weeks and months late in getting permanent modification.
“I think it’s great,” del Rio said of the new pressure from Washington. “Something stronger needed to be done long ago.”
Under the administration’s Home Affordable Modification Program, qualified homeowners can obtain a three-month reduction in their mortgage payment, during which time lenders work out a permanent modification that reduces payments that ideally would be no more than 31 percent of household income.
So far, about 675,000 borrowers nationally have received modifications and 375,000 are due to reach the three-month trial period by year’s end. Only 1,700 so far have actually received permanent loan adjustments.
Gary Sof, 43, a Spring Valley general contractor who was allowed to reduce his monthly payment on a duplex from $4,500 to $1,800 in July, is still waiting for his permanent modification.
“I’ve made five payments and am going on my sixth,” Sof said.
He said his loan servicer, JPMorgan Chase, has sent him requests for more signatures and documents to supply but given no indication of when a permanent change will be made.
“I don’t know what’s going on there,” Sof said. “I suspect that maybe they’re so backlogged they’re not getting to the files.”
That’s partly true, said Chase spokesman Gary Kishner. Even after the bank has increased loan servicing staff from 8,000 to 13,000 over the past year, there is a backlog of applications awaiting action. Kishner said there are other reasons for delay, including the need to get approval from investors who hold the mortgages that Chase is servicing.
“We have to go to the investor to get permission to modify a loan an investor owns,” he said. “We’re not necessarily in control of the modification.”
Consequently, loans have to be dealt with one at a time and that’s why it takes much longer to modify a loan than it took to originate it in the first place.
Treasury and the Department of Housing and Urban Development said in their announcement yesterday that they will require servicers to submit a schedule of action plans for each loan they are working with and the results will be reported daily to the White House. They also plan to issue a report this month listing permanent modification numbers, sorted by servicer and date.
Publicizing which companies are doing a poor job is seen by officials as a way to get faster progress on stabilizing the housing sector and help owners coping with unemployment and unaffordable mortgage payments. Chase’s Kishner said his bank will not comment on its modification progress and any backlog until the federal report is released.
HUD will order its 81 field offices to distribute outreach tools for modifying loans and encourage 2,700 HUD-approved counseling organizations to distribute information to borrowers. There are 12 such organizations in San Diego County, including Community HousingWorks.
Yesterday, Nestor Aguiar, 41, and his wife, Guadalupe, 40, were at the agency’s office to sign the final paperwork to permanently modify their Wells Fargo loan — down from a $1,750 monthly payment to $830. They had bought a townhouse in Chula Vista in May 2006 for $410,000 and kept current on their payments, but Nestor Aguiar’s income as a concrete mix driver fell with the slowdown in construction and they needed help. His wife is a homemaker.
“It’s our Christmas present,” Guadalupe Aguiar said.
The Treasury Department said it would start publishing this month which of the top 70 lenders and services are failing to permanently modify loans as promised. The department threatened sanctions and penalties if lenders fail to meet the participation agreements they signed with the federal government.
“We now must refocus our efforts on the conversion phase to ensure that borrowers and services know what their responsibilities are in converting trial modifications to permanent ones,” said Phyllis Caldwell, the department’s homeownership preservation chief.
Gabe del Rio, senior vice president of Community HousingWorks, a San Diego nonprofit advocacy group, said one-third of modifications under the Treasury’s program that his agency has arranged are weeks and months late in getting permanent modification.
“I think it’s great,” del Rio said of the new pressure from Washington. “Something stronger needed to be done long ago.”
Under the administration’s Home Affordable Modification Program, qualified homeowners can obtain a three-month reduction in their mortgage payment, during which time lenders work out a permanent modification that reduces payments that ideally would be no more than 31 percent of household income.
So far, about 675,000 borrowers nationally have received modifications and 375,000 are due to reach the three-month trial period by year’s end. Only 1,700 so far have actually received permanent loan adjustments.
Gary Sof, 43, a Spring Valley general contractor who was allowed to reduce his monthly payment on a duplex from $4,500 to $1,800 in July, is still waiting for his permanent modification.
“I’ve made five payments and am going on my sixth,” Sof said.
He said his loan servicer, JPMorgan Chase, has sent him requests for more signatures and documents to supply but given no indication of when a permanent change will be made.
“I don’t know what’s going on there,” Sof said. “I suspect that maybe they’re so backlogged they’re not getting to the files.”
That’s partly true, said Chase spokesman Gary Kishner. Even after the bank has increased loan servicing staff from 8,000 to 13,000 over the past year, there is a backlog of applications awaiting action. Kishner said there are other reasons for delay, including the need to get approval from investors who hold the mortgages that Chase is servicing.
“We have to go to the investor to get permission to modify a loan an investor owns,” he said. “We’re not necessarily in control of the modification.”
Consequently, loans have to be dealt with one at a time and that’s why it takes much longer to modify a loan than it took to originate it in the first place.
Treasury and the Department of Housing and Urban Development said in their announcement yesterday that they will require servicers to submit a schedule of action plans for each loan they are working with and the results will be reported daily to the White House. They also plan to issue a report this month listing permanent modification numbers, sorted by servicer and date.
Publicizing which companies are doing a poor job is seen by officials as a way to get faster progress on stabilizing the housing sector and help owners coping with unemployment and unaffordable mortgage payments. Chase’s Kishner said his bank will not comment on its modification progress and any backlog until the federal report is released.
HUD will order its 81 field offices to distribute outreach tools for modifying loans and encourage 2,700 HUD-approved counseling organizations to distribute information to borrowers. There are 12 such organizations in San Diego County, including Community HousingWorks.
Yesterday, Nestor Aguiar, 41, and his wife, Guadalupe, 40, were at the agency’s office to sign the final paperwork to permanently modify their Wells Fargo loan — down from a $1,750 monthly payment to $830. They had bought a townhouse in Chula Vista in May 2006 for $410,000 and kept current on their payments, but Nestor Aguiar’s income as a concrete mix driver fell with the slowdown in construction and they needed help. His wife is a homemaker.
“It’s our Christmas present,” Guadalupe Aguiar said.