Industry NewsMortgage

Ocwen doing ‘Home Affordable’ mods

Subprime servicer claims superior success rate

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Subprime loan servicer Ocwen Financial Corp. said Monday it believes the company is the first to begin modifying mortgages under the terms called for under the Obama administration's Making Home Affordable initiative. The Making Home Affordable initiative will provide $75 billion in subsidies, insurance and incentives for borrowers and loan servicers with the goal of helping them modify 3 million to 4 million loans to prevent foreclosures. Participating lenders must reduce a loan's interest rate to get monthly mortgage payments down to no more than 38 percent of a borrower's income. The initiative would provide dollar-for-dollar matches for further interest-rate reductions, bringing mortgage payments down to 31 percent of a borrower's income. Loan servicers could earn a $1,000 upfront fee for each loan modification, plus $1,000 a year for up to three years when borrowers stay current on their loans. Borrowers who stay current on their modified loans are eligible for princi...