|With a little help from modification vendors, mortgage companies are completing more mortgage modifications. One service, however, hopes to exploit compliance errors to extract more favorable modification terms from servicers.
A streamlined mortgage loan modification package is now being offered by McGlinchey Stafford PLLC. The service, priced on a per-unit basis, utilizes forms appropriate for a wide variety of modification terms.
Conforming and nonconforming modifications can be outsourced to the law firm or can be accessed online. The service is available for first and second liens, and it can be adapted as economic stimulus packages evolve.
The regulator of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, reported this week to Congress that the two government sponsored housing enterprises modified 4,402 loans in August. Activity in August was lower than the year-to-date monthly average of 4,959.
Fannie and Freddie completed 15,528 foreclosures in August.
IndyMac Federal Bank, F.S.B., has mailed more than 24,000 loan modification proposals through November, Federal Deposit Insurance Corporation special advisor Michael H. Krimminger testified before U.S. senators yesterday, according to a transcript of has prepared statement. More than 5,400 borrowers have accepted the modification offers and are now making payments at the modified terms.
U.S. Bank agreed to implement an IndyMac-style streamlined modification program as a condition of acquiring the banking operations of Downey Savings and Loan Association, F.A., and PFF Bank & Trust -- which both failed last month -- according to the Consumer Mortgage Coalition.
Moody's Investors Service issued a report indicating that the FDIC's recent proposal to pay servicers $1,000 to modify delinquent loans while letting them share in losses if loans re-default has the potential to improve loan performance. The ratings agency noted that the plan balances incentives for borrowers, servicers and investors.
But the FDIC's program does not address negative home equity and requires all-or-nothing participation by servicers.
Moody's said that FHA's Hope for Homeowners program could benefit some borrowers, but participation in the program has been limited so far.
"Troubling to investors is that H4H locks in the existing investor's loss, without providing a mechanism for future recovery," says Moody's VP-Senior Credit Officer William Fricke. "H4H also does not address the administrative costs that servicers bear when they modify loans."
MortgageDaily.com advertiser Mitigation Online Consultants is recruiting originators and mortgage brokers to help delinquent borrowers with modifications and other loss mitigation activities. The firm, which said it has a 90 percent success rate, charges a flat fee for modifications and lets loan officers determine their own fees.
Another firm seeks to exploit compliance violations to extract modifications from lenders that are more favorable to borrowers.
MitiGroup LLC announced today that it launched a credit services conduit formation for forensic documentation audits, credit audits and loan modifications -- among other servicers. The company tracks down errors with RESPA, TILA, HOEPA and ECOA.
"Our internal data has yielded a staggering 78 percent of the ARMS we audit have substantive errors that are violative of consumer lending laws such as TILA," the Boca Raton, Fla.-based firm claimed in the announcement.