Firm Commentary:  – The U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development extended the Obama Administration’s Making Home Affordable Program through December 31, 2015.  The new deadline now coincides with the Federal Housing Finance Agency (FHFA) extended deadlines for the Home Affordable Refinance Program (HARP) and the Streamlined Modification Initiative for loans owned or guaranteed by Fannie Mae and Freddie Mac.


HAMP is the key component to the Obama Administration’s efforts to provide relief to families at risk of foreclosure, the common sense option of “judicial modification” failed to pass the U.S. Senate in 2009.  Under HAMP, loan servicers, not loan investors or bankruptcy courts, generally decide which homeowners receive modifications…and get paid tens of millions of taxpayer dollars.  The Fox continues to watch for the Chickens…and Chickens get to pay for it.  In case you haven’t noticed, this is our casino capitalism version of democracy.


“The housing market is gaining steam, but many homeowners are still struggling,” said Treasury Secretary Jacob J. Lew. Of course…but after 4 years, why?  It’s because the program has been somewhat of a failure in that it incentivizes loan servicers, like Chase, Bank of America, Wells Fargo, OCWEN, Citibank, Aurora and successors of GMAC to drag out the process, drive up loan balances and rack up additional servicing fees at the expense of investors or borrowers if they eventually receive a modification.  Monthly loan servicing fees triple when a borrower is in default.  This has affected servicers’ incentives to properly train and staff its loss mitigation departments or to process modifications in a timely and competent manner. In some case, borrowers have remained in perpetual default for over 5 years.  As the servicing fees grow, investors get less once a property is foreclosed as the servicers take their revenue off the top.


According to Lew, as of March 2013, more than 1.1 million homeowners have received a permanent modification of their mortgage through HAMP, with a median savings of $546 every month.  Again, the program was designed to assist 5 Million homeowners and was supposed to be completed by the end of 2012.  However, since Treasury failed to ensure that loan servicers actually followed HAMP guidelines, such as the processing, timeline and foreclosure protection requirements, tens of thousands of borrowers were dual tracked, under-served, deceived, wrongfully denied and evicted.  During the same period, the same loan servicers continued to be profitable often at the expense of the mortgage backed security trust investors (pension plans, governments, hedge funds and insurance companies, whose interests they were supposed to serve.  Loan servicer screwed investors and taxpayers alike.


Major mortgage servicers Ocwen, Walter Investment and Nationstar stand to gain with the White House officially extending the Home Affordable Modification Program another two years, according to Compass Point Research & Trading said.  These companies took over most of the Bank of America\Countrywide servicing and now stand to gain tens of Millions of dollars from new HAMP incentive payments that TRIPLE rewards for writing down principal balances.  “Roughly 9% of OCN’s revenue in 2012 derived from HAMP fees, we estimate NSM modified roughly 10% of the delinquent borrowers through HAMP in 2012 and WAC had a limited amount of HAMP modifications,” said Compass Point.


“We believe the extension of HAMP is a greater positive for NSM given the company will have over $55B of nonperforming unpaid principal balance it needs to work through following the boarding of the Bank of America private-label servicing portfolio. “Ocwen recorded $77 million in HARP fee revenue while servicing $25 billion nonperforming loans in 2012, Compass Point added.  Of course, had Loan Modification been left to the COURTS, no tax payer money would be spent enriching these companies.


If you are still hanging on to your property, there is still hope.  Contact the office to see how we can use this extension of HAMP as a means to keep you in your home.  -J. Arthur Roberts

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