Treasury Reinstates HAMP Incentives as Servicers Show Improvement

By: Carrie Bay 03/02/2012

The Treasury Department says servicers participating in the Home Affordable Modification Program (HAMP) are getting better at evaluating homeowners for the program, including noticeable improvement in assessing borrower income to determine program eligibility and calculate the amount of their modified payments.

Treasury reported Friday that during the fourth quarter of 2011, seven of the largest participating servicers were found to be in need of “moderate improvement” and two servicers were found to need only “minor improvement” with respect to the specific performance metrics tested. No servicer was found in need of substantial improvement last quarter.

OneWest Bank and Select Portfolio Servicing performed at the highest level, needing only minor improvement. The seven servicers deemed to need moderate improvement include: America Home Mortgage Servicing, Bank of America, CitiMortgage, GMAC Mortgage, JPMorgan Chase, Ocwen, and Wells Fargo.

HAMP performance reviews evaluate servicers based on three categories: identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management, and governance.

Treasury singled out JPMorgan and BofA in its latest report, noting that both servicers had improved their practices over the last quarter. Treasury had been withholding HAMP incentive payments from the two companies because prior servicer assessments found them to be in need of “substantial improvement.”

Bank of America was found to have remedied essentially all areas previously identified as needing improvement and continued to demonstrate improved processes generally, Treasury said.

JPMorgan Chase showed marked progress in remedying a number of outstanding issues from previous quarters, according to the report, including improving the speed at which it processes eligible homeowners for permanent HAMP modifications and strengthening its internal quality assurance processes around the program.

Treasury said it agreed to release withheld incentives for past deficiencies as part of the $25 billion federal-state mortgage servicing settlement announced last month, but officials stress that they retain the right to withhold incentives in the future should the results of HAMP compliance reviews warrant such remedial action.

As of the end of January, participating servicers had granted 951,319 permanent HAMP modifications to distressed borrowers. There are an additional 76,343 HAMP trials currently in active status.