The Home Affordable Mortgage Program (HAMP), which helped millions keep their homes in the wake of the housing crisis, had fallen victim to abuses as it counted down its final days.
HAMP drew to a close on Dec. 31, 2016, and a replacement program, called Flex Modification, debuted as its replacement. As with HAMP, it will be available for loans owned or backed by Fannie Mae or Freddie Mac.
According to statistics, HAMP proved to be a lifeline for many.
The Office of the Comptroller of the Currency reported that loans modified through HAMP performed almost twice as well as those in the private sector.
According to a Treasury Department report released in March, 2.8 million people received permanent loan modifications. The report also showed that the number of homeowners who are more than 30 days delinquent on their mortgages dropped from 6.1 million in 2009 to 2.7 million in December 2016.
Tom Goyda, senior vice president of consumer lending communications for Wells Fargo, pointed out recently that the bank completed in excess of 1 million mortgage modifications since 2009 – most outside of HAMP.
“HAMP provided payment relief to millions of borrowers and also helped bring standardization to the modification approach across the industry,” he said. “Fortunately, delinquencies are down significantly and home prices have rebounded in most regions, so fewer people need assistance to avoid foreclosure.”
And with many things, there are people who look to make an opportunity for themselves.
According to watchdog the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), $2.4 billion in taxpayer money for cancelled HAMP modifications ended up in the pockets of residential mortgage services and investors for cancelled HAMP modifications.
According to the New York Post, at least 155,000 of those homeowners lost their homes.
The watchdog group found that Treasury paid $448 million, even after finding the performance of Bank of America, Ocwen, Nationstar, Wells Fargo JPMorgan Chase, and CitiMortgage was in need of improvement, sometimes over multiple quarters.
Earlier this year, SIGTARP released a report summarizing Ocwen’s performance that spans just over a page, and includes nine uses of “wrongfully,” along with one instance each of “improperly,” “misconduct” and “mismanagement.”
SIGTARP wrote that it continued to find in 2014 through 2016 that Ocwen wrongfully cancelled homeowners out of HAMP.
“More than 127,000 homeowners who were in a HAMP modification with Ocwen have fallen out of HAMP,” it wrote in the report. “Ocwen was paid in excess of $725 million through HAMP for these cancelled homeowners. More than 30,000 of these homeowners went into foreclosure or otherwise lost their home.”
Ocwen released a statement after the report was released noting it led the industry in HAMP modifications during the life of the program, and as “extremely proud of our performance and our success.”
Ocwen also said it remained committed to working with distressed borrowers to find the right loan modification to allow them to keep their homes while continuing to provide cash flow for loan investors.
“There is no doubt that a homeowner whose loan is serviced by Ocwen has a much better chance of avoiding foreclosure than if their loan is serviced by any other large mortgage servicer,” the statement concluded. “This has been confirmed by independent third-party studies, which consistently illustrate that Ocwen has a superior record helping borrowers bring their payments current, stay current, and repay their mortgage. This is a record we are proud of.”
However, in its report SIGTARP noted that Treasury remains contracted to pay up to another scheduled $2.2 billion and possibly an additional $941 million to Ocwen. As a result, “continued oversight over these billions of dollars and this program remains critical.”