Faster Relief for Struggling Homeowners through Loan Modifications

The top officials of the current administration met with the servicers participating in the Making Home Affordable loan modification program to discuss ways to improve effectiveness and efficiency of the program. Their meetings resulted in three recommendations.

The first move is to begin publicly reporting results under the program based on servicer-specific performance. This is to include the number of trial modification offers each servicer has extended to eligible borrowers. Also in the report will be the number of trial plans that are underway, the number of final modifications, and eventually, the long term success of those modifications. The first report will be released by August 4th.

Second, the committee  looked at wait time involved from the application process to the modification approval.  They determined to set more exacting operational metrics to measure the performance of the program, such as average borrower wait time for inbound borrower inquiries, the completeness and accuracy of information provided applicants, document handling, and response time for completed applications.

Third, was to ask lender conduct a thorough review so as not to overlook or deny a modification. The Administration asked Freddie Mac, in its role as compliance agent, to develop a “second look” process pursuant to which Freddie Mac will audit a sample of MHA modification applications that have been declined. Freddie Mac will coordinate with servicers to address specific cases that arise and to address general operational weaknesses where errors prove more systematic.

How this changes works remain to be seen. The Administration has established a goal of reaching half a million trial modifications begun by Nov. 1, 2009.

Technorati Tags: at risk, foreclosure. administration, lenders, loan modification