HAMP

HAMP, the Treasury program that allows eligible homeowners to reduce their mortgage payment, will come to an end on December 30, 2016. The program, begun in 2009 as part of the “Making Home Affordable” initiative, was extended from its original deadline of December 30, 2015. A compilation of information provided by servicers participating in MHA under a Servicer Participation Agreement shows that, as of September, 2016, the program has processed over 9.3 million applications of which approximately 2.9 million were approved and 6.5 million denied.

To apply for HAMP, you must submit by December 30, 2016:

• A “Request for Mortgage Assistance”  (RMA) form
• IRS Form 4506T, 4506T-EZ, or a signed copy of last year’s tax return
• The “Dodd-Frank Certification” (which may be part of the RMA)
• Proof of income

Forms and information about the program are available at www.makinghomeaffordable.gov.

hamp-activity-report

A report to Congress by the Special Inspector General Troubled Asset Relief Program (SIGTARP) examined the reasons for the high percentage of redefaults by homeowners in HAMP. By December 31, 2015, over 500,000 homeowners who had HAMP modifications had missed three payments (“redefaulted”) on their loans. This number represents approximately one third of homeowners in the program. Concern over the high redefault rate and potential misconduct on the part of the servicers caused the Treasury, at SIGTARP’s request, to conduct compliance testing at each of HAMP’s largest servicers; Bank of America, CitiMortgage, JP Morgan Chase, Nationstar, Ocwen, Select Portfolio Servicing, and Wells Fargo. The Treasury looked at samples of 100 homeowners who had redefaulted out of HAMP at each of the targeted servicers. The study found that 6 out of 7 servicers had wrongfully terminated homeowners who were in good standing. (The only large servicer that had not been found to have erred in this way was Select Portfolio Servicing, Inc.). These six mortgage servicers account for 673,039 of the 915,699 (74%) HAMP modifications funded solely by TARP since the start of the program.

The improper servicing was so entrenched that 4 out of the 6 servicers continued to commit the termination errors even after the Treasury had repeatedly identified problems in their systems. Errors included miscounting the number of missed payments by a homeowner, misapplication of payments, and mishandling of rolling delinquencies. The report noted that servicers regularly failed to make timely and accurate reports to the Treasury thereby making monitoring difficult.

The Treasury also found that 5 out of 7 servicers failed to offer redefaulting homeowners alternative assistance available through the Making Home Affordable Program. The report concludes with the warning that the number of erroneous terminations from HAMP in the small sample tested is an indication of extensive misconduct on the part of the servicers which must be addressed by further oversight by the Treasury.

SIGTARP report re HAMP

Men Are From Mars, Women Are From Venus is the classic guide to understanding relationships between men and women.  A similar resource is desperately needed for consumer advocates and some federal regulators (Treasury and the NMS Monitor, specifically) because it seems we are not even working in the same galaxy!  As evidence of this cosmic disconnect, Ocwen Financial Corp. recently announced (here) that it had received top marks from the HAMP compliance team in all categories for the second quarter of 2014.  This is the same Ocwen that in December 2013 agreed to a consent order with the CFPB and authorities from 49 states who believed that “Ocwen engaged in significant and systemic conduct that occurred at every stage of the  mortgage servicing process.”  (See CFPB Press Release and Complaint, here). According to the CFPB complaint Ocwen: (1) took advantage of homeowners with servicing shortcuts and unauthorized fees; (2) deceived consumer about foreclosure alternatives and improperly denied loan modification; and (3) engaged in illegal foreclosure practices.  It would be great if Ocwen truly remedied all these deficiencies in such a short time, but that’s not the experience on the ground.  The glowing report from Treasury’s HAMP  team sadly suggests that six years after the mortgage meltdown consumer advocates and regulators are still worlds apart in even understanding how to measure compliance with Obama’s flagship program to help struggling homeowners.

 

Yesterday, the Ninth Circuit Court of Appeals held in Corvello v. Wells Fargo Bank, N.A., No. 11-16234, that Wells Fargo was contractually obligated under the terms of a HAMP trial period plan (TPP) to offer permanent modifications to borrowers who complied with the TPP by submitting accurate documentation and making trial payments.  Such an interpretation of the TPP, the Court stated, “avoids the injustice that would result were Wells Fargo’s position accepted and Wells Fargo allowed to keep borrowers’ trial payments without fulfilling any obligations in return.  The TPP does not contemplate such an unfair result.”  More scathing was Judge Noonan’s concurrence in which he stated that:

“No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him. “Heads I win, tails you lose” is a fraudulent coin toss. Wells Fargo did no better.”

The Court rejected arguments that Wells Fargo’s failure to return a signed copy of the TPP to the borrower precluded liability.  For purposes of the decision, the Court assumed that the borrowers fulfilled all of their obligations under the TPP, as alleged.   The Court noted, however, that Wells Fargo could still raise factual disputes during the litigation.