Bank of America is picking up the pace of loan modifications under the Home Affordable Modification Program (HAMP) and isn’t lagging as far behind the industry as the latest numbers from the Treasury Department suggest, the company said today.
At the end of last month, Bank of America had made trial or permanent modifications on 14 percent of the estimated 1 million HAMP-eligible loans it’s servicing that were delinquent by 60 days or more, the Treasury Department said in a report last week.
The industry average was 24 percent, and seven loan servicers have topped 30 percent, including CitiMortgage (43 percent), JP Morgan Chase (31 percent) and Wells Fargo (30 percent), the report said (see story).
Jack Schakett, Bank of America credit loss mitigation strategies executive, said that as the lender makes contact with the more than 1 million borrowers in its servicing portfolio that the Treasury Department has identified as HAMP-eligible, it’s finding many are not.
Some are no longer owner-occupants, others are unemployed, and some already have affordable mortgage payments that are less than the HAMP target of 31 percent of their income, Schakett said in a conference call with reporters.
It’s likely that only about 340,000 of the 1 million 60-day-delinquent mortgages Bank of America is servicing that the Treasury Department has identified as HAMP-eligible actually are, Schakett said.
Bank of America has offered trial loan modifications to 74 percent of that population, and started trial modifications on half of those loans, Schakett said, which compares favorably to the industry as a whole, he said. …CONTINUED
Schakett cited recent congressional testimony by Treasury Assistant Secretary for Financial Stability Herbert Allison, who said that the number of homeowners who were both 60 days delinquent and HAMP-eligible at the beginning of November was less than 1.5 million, and that 650,000 (43 percent) had begun trial modifications.
"We look (like we’re) behind the curve, but when you back out those who are not qualified, those numbers look better," Schakett said.
In its Dec. 10 report, the Treasury Department stuck to its original estimate that there were 3.3 million HAMP-eligible, 60-day-delinquent loans, concluding that about 24 percent had been modified by all participating servicers.
The Treasury Department has said it uses the estimated number of HAMP-eligible loans that are delinquent by 60 days primarily as a benchmark, allowing an apples-to-apples comparison of the performance of loan servicers participating in the program. The benchmark doesn’t include loans that are current or less than 60 days delinquent, but which may be eligible for HAMP if a borrower is in imminent default.
So won’t other HAMP loan servicers also see improvements in the percentage of loan modifications they’ve made in relation to eligible borrowers when they make the same adjustment to the numbers as Bank of America?
"We have more customers who fail the actual eligibility requirements compared to our competitors," Schakett said.
"The only way I can explain that is that Bank of America was very protective" about foreclosing on homeowners, he said, meaning it may have more delinquent borrowers who aren’t HAMP-eligible than other servicers.
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