Kucinech, Lawmakers Take on Top 4 Mortgage Lenders, er, Servicers, er, Mortgage Companies…

25 Jun

This Reuters news story from Yahoo is full of those perfectly phrased sound bites the servicers love to use – they are improving – they are trying – they are getting better.

But the numbers in the story tell a different tale than the nicely phrased statements about foreclosures being the ‘last resort’ and the servicers actually doing anything that works for the borrowers.

With foreclosures scheduled to top 4 million this year alone, it is hard to reconcile the numbers in this article with the idea put forth by these people that it is an option of last resort, when the numbers of foreclosures outstrip the number of modifications ten to one  or better.  How is it possible that an option of last resort is the most common result by overwhelming numbers??

Meantime, the total numbers of loan modifications (especially after the drop outs and the re-defaults now hitting over fifty percent and loss of income still being a primary cause of foreclosures) is not looking like there is any real improvement due to show up any time soon in the loan modification statistics…

And is it just us, or is everyone seeing that these guys are alternately


Mortgage Industry

Mortgage Lenders


Mortgage Servicers



Mortgage companies

Mortgage Banking Industry

oh, and while we’re at it:

“AHMS does not make or hold loans. AHMS is known in the industry as a monoline servicer, while the other four firms both make and service loans.”

Did anyone else notice how AHMS does not make or hold loans but the big banks make and service loans (but certainly do not hold them?)

those who ‘make’ the loans do not hold them after they are ‘made’
so they are ultimately still only ‘servicers’ in real time; and servicers
with a completely different economic incentive and agenda than

Perhaps some definitions are in order as it seems to us these are extremely muddy waters and extremely ill-defined businesses.

Lawmakers slam top mortgage firms on loan mods

By Corbett B. Daly Corbett B. Daly – Thu Jun 24, 6:01 pm ET

WASHINGTON (Reuters) – The four largest mortgage lenders in the United States were grilled on Capitol Hill on Thursday about the limited number of home loans they have modified for homeowners facing foreclosure.

“I just wonder how hard you are really trying?” Rep. Dennis Kucinich asked David Lowman, chief executive of home lending at JPMorgan Chase & Co (JPM.N).

Lowman said JP Morgan had been understaffed to handle the demand from struggling homeowners seeking to restructure payments, though they have added staff in recent months.

“Why are you denying loan modifications to my constituents?” Kucinich, an Ohio Democrat, asked Lowman, calling JP Morgan Chase uncooperative with borrowers.

Ohio has been one of the hardest-hit states in the U.S. home foreclosure crisis.

The House Oversight and Government Reform Committee also summoned chief executives of the home lending units of Bank of America Corp (BAC.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) to answer questions about their loan modification practices.

Also at the witness table was American Home Mortgage Servicing Inc, which collects loan payments but does not make or hold loans. AHMSI is known in the industry as a monoline servicer, while the other four firms both make and service loans.

In 2009, the Obama administration announced the $75 billion Home Affordable Modification Program, known as HAMP, which provides incentives to loan servicers to modify loans for troubled borrowers. HAMP has been widely criticized as ineffective. Less than $200 million has been spent to date.

The Treasury Department said on Monday more people had been kicked out of trial loan modifications than had received permanent modifications.

About 150,000 borrowers who could not prove their income or keep up with the new payments had their modifications canceled in May, bringing the total number of cancellations to about 430,000, or more than one-third of the 1.24 million trial modifications started since the program’s inception.


The number of borrowers who have received a permanent loan modification rose to 340,459 in May — about 11 percent of 3.2 million HAMP eligible loans.

“This is not just about HAMP,” the panel’s chairman, Edolphus Towns, said, referring to the modification program.

“I think the mortgage banking industry has got to recognize that HAMP cannot be the only solution to the mortgage foreclosure crisis,” the New York Democrat told the financial executives.

Herb Allison, assistant Treasury secretary for financial stability, noted that there was little precedent on how to design a large national program and the administration has now begun to put pressure on servicers to increase modifications by publicly releasing data on their performance.

“The HAMP program fundamentally changed the servicer industry from one based on collecting payments and processing foreclosures, to one that provides payment assistance to qualified homeowners,” Allison said in a prepared statement released after the hearing.

All of the executives said they have made more loan modifications than just HAMP modifications.

JP Morgan Chase said it has completed about 173,000 permanent modifications, including roughly 47,500 HAMP loans, since the beginning of 2009.

Bank of America said it has completed more than 630,000 loan modifications since January 2008, including roughly 70,000 HAMP loans.

Rep. Steve Driehaus, an Ohio Democrat, urged the executives to stop foreclosure proceedings while they negotiated new loan terms with borrowers.

“We are sending a very mixed message when we are proceeding with foreclosure while negotiating” a loan modification, Driehaus said.

Citi and Wells Fargo said they do stop foreclosure proceedings as soon as loan repayment talks begin. Bank of America, JP Morgan Chase and AHMSI said they continue to pursue foreclosures on a dual track strategy, though foreclosure remains an option of last resort.

(Reporting by Corbett B. Daly; Editing by Jan Paschal and Jeffrey Benkoe)

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