The Treasury Department’s latest scorecard on the government’s Home Affordable Modification Program reveals that most major mortgage servicers significantly increased the number of trial loan modifications they are doing between August and September. But the new data also show that some of the biggest servicers–most notably Bank of America–are way behind when it comes to HAMP modification activity. Treasury reported that only 11 percent of the Bank of America loans theoretically eligible for HAMP have seen trial loan modifications. Meanwhile, CitiMortgage had started trial mods on one-third of its eligible mortgages–the highest level recorded by any top five mortgage servicer.

A senior executive from CitiMortgage will be discussing the company’s approach to HAMP at an Inside Mortgage Finance audio conference on October 21 at 2 pm EDT. Click here for more info.

Two senior executives from Fannie Mae have joined the panel that will discuss the government’s Home Affordable Modification Program at an Inside Mortgage Finance audio conference on October 21 at 2 pm EDT. Fannie regulates its customers for HAMP compliance plus it serves as an administrator –including managing incentive payments– for the overall program. Joining Fannie Mae at the upcoming audio conference are executives from CitiMortgage, the Boston Fed as well as a legal expert on HAMP.

Click here for more info.

The mortgage servicing market’s two largest players–Bank of America and Wells Fargo–did not fare very well in the loan modification scorecard released by the Treasury Department yesterday. BofA, the top servicer at the end of the first half with more than $2.1 trillion and business and a 19 percent market share, received one of the lowest scores in the Treasury’s first report on the government’s Home Affordable Modification Program.

Only 4 percent of BofA’s potentially eligible borrowers received trial loan modifications under HAMP. Wells, the second largest servicer at the mid-year mark with $1.8 trillion in business and a 16 percent market share, didn’t fare much better. Some 6 percent of Wells borrowers in default have received trial loan modifications under HAMP. In defense of BofA’s and Wells’ low scores, the Treasury’s new report doesn’t capture non-HAMP loan modifications nor does it reflect other workout options that distressed borrowers may receive.

The Obama Administration sweetened its incentives for mortgage market players that successfully modify troubled loans by announcing this week it would add second mortgages into the bailout mix. Specifically,
Treasury said it will pay servicers $500 to modify a second loan attached to a distressed first mortgage that was receiving a modification under the recently announced Home Affordable Modification program. Also, banks and other investors holding second mortgages will be offered lump sum payments to extinguish second liens altogether.

Separately, Treasury announced it would be promoting use of the FHA’s HOPE for Homeowners program by requiring mortgage servicers using HAMP to consider H4H before modifying a troubled mortgage. To further boost usage of H4H, the government said it would now pay a hefty $2,500 incentive to servicers who successfully refinance a distressed loan using the program.

The Treasury Department continues to develop guidelines for the Home Affordable Modification program. In addition to pending guidance from the Treasury on payments to servicers for mods that default under the
HAM program, the government-sponsored enterprises are working on
guidelines to administer the program and oversee servicers’
compliance. The HAM program is the subject of a new Inside Mortgage
Finance audio conference scheduled for tomorrow at 3 pm EDT. Click
here for more information.

The Obama administration’s new Home Affordable Modification program and its impact on ongoing loss mitigation efforts in the mortgage industry is the subject of a new Inside Mortgage Finance audio conference scheduled for April 2 at 3 pm EDT.

This important event will feature mortgage industry legal experts Larry Platt from K&L Gates and Don Lampe from Womble Carlyle, who will explain all the nuances of the HAM program and where it fits in with other federal efforts to slow down foreclosures. The audio conference also will feature Steve Bailey, head of Bank of America’s massive mortgage servicing operation, who will provide an update on BofA’s loss mitigation efforts as well as his take on the government’s latest push to encourage more loan modifications.

Click here for more info.

The Treasury Department today released anxiously-awaited guidelines on the major mortgage modification initiative announced by the Obama administration two weeks ago. As expected, the guidelines borrow heavily from the Federal Deposit Insurance Corporation’s IndyMac loan modification initiative. But new details include that lender/servicer incentives will be paid for not just loan modifications but also for refinancing into the HOPE for Homeowners Program, as well as short-sales and deeds-in-lieu of foreclosure.

Significantly, the new guidelines reveal that incentives also will be paid “to extinguish second liens” on modified mortgages, although no specifics are supplied. Additionally, the Obama loan modification plan will be available for all non-FHA/VA mortgages with balances up to $729,750 nationwide. To participate in the Obama loan modification plan, servicers must prove a modification is sustainable by performing a 90-day “trial” modification.

In its 10-k filing with the Securities and Exchange Commission late last week, Fannie Mae disclosed that the Obama administration expects the company –and presumably Freddie Mac– to pick up the government’s tab of paying both servicer and borrower “incentives” for modifying government-sponsored enterprise-related mortgages.

“We will bear the full costs of these modifications and will not receive a reimbursement from Treasury,” Fannie writes in its filing, noting that these costs will include incentives paid to servicers as well as borrowers over a several-year period. “Fannie Mae, rather than Treasury will bear the costs of these servicer and borrower incentive fees,” the GSE says. The incentives announced by the Obama administration could run as high as $11,000 per successfully modified loan. Separately, Fannie revealed in its new SEC filing that it will play a major role in administrating the Treasury’s Homeowner Affordability and Stability Plan.

The widespread implementation of voluntary foreclosure moratoriums in early 2009 is resulting in an unprecedented buildup of defaulted mortgages that will be extremely difficult to work through in the months ahead. According to preliminary numbers compiled by Inside Mortgage Finance, a record-high 2.54 percent of mortgages serviced by the top servicers in the country were 90 days or more delinquent at year-end. This was the largest quarterly jump ever recorded in the most serious delinquent category.

At the end of the third quarter, 90 plus day delinquencies stood at 1.92 percent. The buildup of defaulted loans has only gotten worse in the first quarter as most major mortgage market players have reduced or stopped foreclosures in response to political pressure. The new Obama loan modification initiative will be severely challenged to put a dent in the more than one million mortgages now facing foreclosure.

Fed Chairman Ben Bernanke announced this week that the Federal Reserve would start renegotiating the terms of mortgages it inherited from
Bear Stearns and AIG in an effort to stem the tide of foreclosures. While it wasn’t clear how many mortgages are involved, it appears the
bulk of the loans are subprime and Alt A backing non-agency mortgage securities.

It also wasn’t clear whether the Fed planned to utilize the staff of the FDIC, which has the most experience in loan modifications, to oversee the process. In a departure from most past loan modifications efforts, Bernanke indicated the Fed planned to aggressively utilize principal reductions as part of its renegotiations with borrowers. Some $50 billion worth of mortgages could be involved.