The Treasury will soon publish much more detailed performance data on Home Affordable Modification Program (HAMP) servicers, Treasury Secretary Tim Geithner told a Senate subcommittee Thursday.
‘I want to be clear that we do not believe servicers are doing enough to help homeowners – not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure,’ Geithner said before the Senate Subcommittee on Financial Services and General Government, adding that servicers are undergoing in-depth compliance reviews.
Administrators say they have observed a wide variation in performance across servicing shops.
‘We are troubled by reports that servicers have foreclosed on potentially eligible homeowners, or that they have steered these borrowers away from HAMP and into the bank's own modification program," Geithner told the panel. In March, the Obama administration announced a slew of new program changes, including a requirement that forbids servicers from referring a file to foreclosure until the loan has been found ineligible for HAMP.
Geithner said Thursday that program administrators are "compelling servicers to re-review groups of mortgages – or their entire book – for eligibility."
"And in circumstances where servicers are not compliant, we will withhold incentives or demand their repayment," he said.
While the Treasury points fingers at servicers, others – such as bailout watchdog SIGTARP – note that the Treasury's announcement of program changes has created confusion among borrowers and servicers alike.
"Time pressures have led to servicer complaints in the past about unclear and frequently revised HAMP guidelines," a recent SIGTARP report states. "Unfortunately, early indications provide cause for concern that the new revisions may aggravate those problems rather than improve them."
Sources tell MortgageOrb that servicers are overhauling operations to meet HAMP compliance.
"The amount of process work being done right now around those changes is significant, and our clients are dealing with it every single day – from a resource perspective, from a process-change perspective – to make sure it's done right," says Grace Brasington, executive vice president of strategic consulting services for Lender Processing Services. "The revisions have impacted the servicersâ�¦it is not a small amount of work they're doing, and they're working tirelessly."