With the Homeowner Affordability and Stability Plan off to a disappointingly slow start, industry watchers have tried to pinpoint the weak points in the system so that the plan can start gaining traction. Time to, train staff, and learn the guidelines of the program have taken their share of the responsibility as lenders and servicers shrug their shoulders and say they’re working on it. A story in New York Times gives the appearance that the inefficiencies which have bogged down so many modifications are, if not intentional, are not going to be fixed any time soon either.
For the story, a loan modification firm allowed a Times reporter to listen as its agents contacted mortgage lenders and servicers as long as the firm wouldn’t be named in the story. The dialog between the firm’s staff and a variety of lenders shows how borrowers are simply worn out by the people they’re trying to modify their loans with.
What is at stake is more than what happens to the homeowners trying to modify their loans. The Obama Administration has positioned HASP as a cornerstone of its strategy to reinvigorate the country’s economy. If the first four months are any indication, the plan has a long way to go before the numbers of loan modifications that need to be done in order to stem the rising tide of foreclosures can be accomplished. In the meantime, the record number of foreclosures will continue, home prices will stay in their downward spiral, and the economy will keep contracting
The administration has been taken to task due to the fact that millions of homeowners have gone into delinquency and foreclosure since the program went into effect almost four months ago. Numbers of home loan modifications done under the guidelines of the program are unknown at this point. Estimates have ranged from 10,000 to 50,000 but, until a tracking system is put in place, it’s all guesswork. Michael S. Barr, the assistant Treasury secretary for financial institutions indicated the frustration being expressed by the administration saying, “They need to do a much better job on the basic management and operational side of their firms. What we’ve been pushing the servicers to do is improve their infrastructure to make sure their call centers are doing a better job. The level of training is not there yet.” That being said, Mr. Barr predicted that by the end of August, 20,000 home loan modifications per week would be completed under the HASP guidelines.
Judging by the dialogs that follow, there is much work that needs to be done.
Case # 1
An agent speaking to a Washington Mutual customer service representative learns that documents which have already been submitted twice and were then lost have gone missing a third time. Skip to next paragraph“I don’t know what happened,” says Washington Mutual’s officer who identifies himself as Chris. “I don’t know if there was a glitch in the system, whether it was transferred from one call center to the other.” As if to clarify the situation he adds, “Think of the documents as being part of a pile massing inside the bank. This pile is not going to be moved forward at any point in time.”
The client seeking the modification owes $490,000 on the mortgage. His income as a self-employed computer engineer has decreased to the point where the $2,500 mortgage payment is eating up most of his budget. The agent can verify that the three rounds of documents have been sent to Washington Mutual. In fact two weeks earlier the file was being reviewed. Still, officer Chris tells the agent to submit round four. “Personally, I’d submit a new file,” Chris counsels. “I’m telling you honestly, anything over 30 days is a new submission for us.”
The agent replies “So, if I wouldn’t have called, we wouldn’t have known?”
Officer Chris gives an explanation that could cover hundreds of thousands of loan modification applications across the country saying, “It would have just sat in the queue and nothing would have happened,” he says. “I wish I had a better explanation.”
Case #2
An agent is trying to modify another loan with Washington Mutual for a client that has upcoming interest rate resets which will push her payments up from $4,400, an amount she’s already struggling to pay. The servicer has confirmed that documents were received on April 29th including pay stubs, tax returns, a letter disclosing her hardship, and bank statements. Since the submission, the company has been waiting to hear back from Washington Mutual regarding its review of the file.
On a follow up call, the agent is told that the application has been rejected due to one missing document, a proof of insurance form. The entire document package must be re-submitted.
He replies “The file had been submitted properly, and you didn’t put the pieces together,” his body quivering with anger. “I’m not going to stand in line again for another six months.”
Demanding a supervisor, he is informed that no one is available. He redials and is connected to Washington Mutual’s officer Becky.
“We’re not taking cases now,” she says calmly.
The agent asks that the file be kept open so that he can fax in the missing proof of insurance form.
“Impossible,” she says, warning of “the sheer amount of papers coming in.”
Case #3
Another agent at the firm has been waiting on hold for twenty minutes with GMAC Mortgage. He’s already got a solution for the couple he’s representing. GMAC has agreed to a principle reduction, allowing the couple to pay off their balance of $270,000 and get a fixed rate loan from another lender. The whole arrange is about to blow up, however.
During the modification process the couple has consistently made their monthly mortgage payments to GMAC. Unbeknownst to them, GMAC hasn’t been directing their payments toward the mortgage but toward loss mitigation fees until the modification is completed. Despite receiving the payments, GMAC has made a notification to the credit bureau that the loan is over 90 days delinquent, a factor that will now prevent them from qualifying for their new loan.
The agent for the loan modification firm calls GMAC’s loss mitigation department to ask for the delinquency to be removed from their credit reports. Told he needs the customer service department, he reaches a rep named Jessica.
“We are not going to amend,” she says, plus he’s in the wrong department, he needs loss mitigation.
“I just talked to them five minutes ago,” he tells Jessica.
“No, you didn’t.”
“Are you accusing me of lying?”
Asking for her employee identification number, the line goes dead. Jessica has apparently hung up.
For the Obama Administration’s HASP program to work, stories like these have to become the exception, not the rule. For homeowners seeking to modify their mortgages, the best bet is to hire a law firm with the knowledge of the modification protocol at each lender. The Feldman Law Center has executed over 600 home loan modifications with lenders and servicers across the country. To have an experienced attorney drive your home loan modification, call them today at (800) 527 8497.