The volume of government-supported loan modifications at Ocwen Loan Servicing has recently doubled and is expected to remain robust.
Beginning in July, the Ocwen Financial Corp. subsidiary saw the volume of loans modified under the Home Affordable Modification double.
The increased pace of HAMP activity is the result of
the streamlining of the program in July 2015 that became effective on Jan. 1 of this year.
Fitch Ratings, which reported the increased volume, said that the streamline HAMP program was outlined by the Department of the Treasury in Supplemental Directive 15-06.
The update targets
borrowers who meet basic HAMP eligibility criteria, including those who haven’t completed a HAMP application by the time their loan is 90 days delinquent.
Ocwen’s spike in HAMP volume resulted from soliciting borrowers for the streamline program in January. They have now successfully completed the three-month trial period, and their modifications have been made permanent.
Increased HAMP activity at other mortgage servicers
has been more modest than at Ocwen on the streamlined program.
Fitch noted that Ocwen expects modification activity to remain elevated for several months.
“Ocwen expects that the increased cash flow from the successful modifications will outweigh the costs of unsuccessful modifications,” the ratings agency wrote. “Unsuccessful modifications will have longer liquidation resolution timelines and likely higher loss severities than they would have had they not been included in the program.”
Fitch noted that Ocwen has historically had higher modifications activity on non-agency securitized subprime and Alt-A mortgages than the industry.