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                                              April Loan Modification Report
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Thank you for subscribing to our online compliance updates. We are pleased to offer these announcements to our valued clients and colleagues.

On May 17, 2010, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) released April data for the Administration's Home Affordable Modification Program (HAMP) showing permanent modifications for almost 300,000 homeowners - an increase of 68,000 or almost 13 percent over March.

New in this month's report is information about servicer-specific conversion rates to permanent modifications and servicer performance in giving homeowners timely decisions. The data show that there is wide variation among servicers in these areas, further demonstrating the need for transparency regarding servicer performance.


Almost 300,000 permanent modifications -
An Increase of 68,000
  • Borrowers in permanent modifications are experiencing a median payment reduction of 36%, more than $500 per month.
  • Over 68,000 trial modifications converted to permanent modifications in April, an increase of almost 13% from March.
Servicers Begin to Require Upfront Documentation
  • In order to comply with Treasury guidelines that take effect on June 1, in March 2010 servicers began collecting upfront documentation from borrowers prior to initiating new trial modifications.
  • Treasury is monitoring servicer performance closely to ensure that borrower demand is met and that servicers are reviewing modification requests in a timely manner.
Resolutions to Borrowers
Who Entered Trials Before January 1, 2010

  • Common causes of cancellations include missed trial payments and incomplete or unverifiable documentation.
New This Month
Conversion Rates By Servicer
  • Servicers show wide variation in conversion rates as measured against trials eligible to convert.
  • Servicers who started trials with verified documents generally posted higher conversion rates than servicers who allowed borrowers to enter trials with stated income. With recent Treasury guidance, all servicers are now verifying borrower documents before trial start.
  • Using stated income upon trial starts, the four largest participating servicers have conversion rates below 30%.
New This Month
Aged Trial Modifications by Servicer
  • Servicers show wide variation in completing timely decisions on trial modifications.
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Making Home Affordable Program - Servicer Report April 2010 (05/17/10)
CRTFStop Mortgage Defaults

Task Force designed to reduce high compare ratios
caused by excessive defaults and claims.

Task Force Description
  • Staffed with subject matter experts
  • Specially designed forensic audits
  • Automated file screening systems
  • State-of-the-art research facility
  • Scalable up to any size default experience
  • Upload large file formats for prompt reviews
  • Secured and safe audit location
Our Remedy
  • Comprehensive review of existing defaults and claims for loss mitigation  and loan modification eligibility
  • HUD-FHA and regulatory compliance guidance for the mortgagee
  • FHA and conventional Early Payment Defaults resolution strategies and loss mitigation methodologies
  • Mortgagee notification of borrower's loss mitigation eligibility
  • Borrower notification of loss mitigation eligibility
  • Expert, nationwide legal counsel to handle loss mitigation and loan modification strategies
  • Monitoring of loss mitigation applications in process
  • Follow-up with servicers to assure proper and timely resolution and notification to HUD-FHA
  • Loss mitigation resolution of new defaults and claims

The Compare Ratio provides a value that reveals the largest discrepancies between the mortgagee's default and claim percentage and the default and claim percentage to which it is being compared.

An indicator of excessive defaults and claims is the FHA Compare Ratio statistic. When a Compare Ratio is above 150, HUD begins a due diligence process.

Mortgagees with a Compare Ratio of greater than 200 are subject to disciplinary review, termination of underwriting authority, and possible loss of FHA mortgagee approval.

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