Government to lenders: ‘Ramp up’ loan modifications

The Department of the Treasury expressed dissatisfaction yesterday with the number of trial loan modification initiated through July 31 and has asked the 38 loan providers participating in the federal government’s Home Affordable Modification program to “ramp up” their efforts.

In fact, two firms that hold some of the largest numbers of delinquent mortgages have initiated the lowest percentage of trial loan modification starts under the HAMP program, according to the Treasury Department.

Charlotte, N.C.-based Bank of America Corp. and Wells Fargo Bank NA of Sioux City, S.D., began trial loan modifications on only 4% and 6%, respectively, of the delinquent loans they hold, according to the Treasury Department, which has tracked the program since its launch on March 4.

BofA had an estimated 796,467 home loans that were delinquent 60 days or more, and Wells Fargo had 329,085 loans, the report said.

Some of the highest percentages of trial-modification starts were made by Saxon Mortgage Services Inc. of Irving, Texas, which applied the program to 25% of its delinquent loans; Aurora Loan Services LLC of Littleton, Colo., with 21%; GMAC Mortgage Inc. of Fort Washington, Pa., with 20%; and JPMorgan Chase & Co. of New York with 20%, the report said.

More than 85% of the mortgage market is covered by the 38 firms participating in the federal program, the Treasury Department report said.

A total of 2.7 million loans held by the firms were estimated to be delinquent, according the report.

The program is providing $75 billion for mortgage modifications.

Since the program began, the 38 firms have made 230,000 trial modifications and more than 400,000 modification offers have been extended, according to the Treasury Department report.

Still, “the data show that servicer performance has been uneven,” the Treasury Department said in a statement.

“The administration has asked servicers to ramp up implementation to a cumulative 500,000 trial modifications started by Nov. 1,” it said. “This would more than double in three months the number of trial modifications started in the first five months of the program.”

Wells Fargo reported yesterday on its website that the firm had modified more than 240,000 mortgage loans, including the 20,219 trial modification starts under the federal HAMP program, through last month.

“Wells Fargo is proud to have helped the government bring this program to bear, while completing more than 220,000 loan modifications, including trial modifications, under our own programs,” Mike Heid, co-president of Wells Fargo Home Mortgage, said in a statement. “Now that the program details are largely complete, our company has been accelerating our use of HAMP.”

A spokeswoman for BofA wasn’t immediately available for comment.

Related Topics: Bank Of America Corp., Mortgages, Wells Fargo & Co.