The Obama administration’s $75 billion foreclosure prevention program has been widely criticized for its failure to, well, prevent very many foreclosures, and ProPublica has been investigating why the program has come up short. According to the publication, one major factor has been a possible “fatal” lack of oversight by the Treasury Department, which said this week that it doesn’t have the power under the Home Affordable Mortgage Program, known as HAMP, to punish mortgage servicers for denying loan modifications without cause. [more]

Poor oversight by the Treasury Department and errors by servicers has led to what may be thousands of homeowners being wrongly denied mortgage modifications under the Obama administration’s Home Affordable Mortgage Program, a government audit has revealed. According to the Government Accountability Office report, “15 of the largest 20 participating servicers [in HAMP] did not comply with various aspects of program guidelines,” when determining which borrowers were eligible for modifications. That determination is supposed to be made based on a calculation using factors like the borrower’s income and equity in the home, but the process is beset with errors, in part because the Treasury Department has failed to issue specific guidelines and standards for servicers to follow, according to the Huffington Post. The number of struggling homeowners rejected from HAMP in error “could range from a handful to thousands,” the report says, and yet the Treasury “has yet to establish specific consequences or penalties for noncompliance,” and has issued no fines. [Huffington Post]

[more]

Poor oversight by the Treasury Department and errors by servicers has led to what may be thousands of homeowners being wrongly denied mortgage modifications under the Obama administration’s Home Affordable Mortgage Program, a government audit has revealed. According to the Government Accountability Office report, “15 of the largest 20 participating servicers [in HAMP] did not comply with various aspects of program guidelines,” when determining which borrowers were eligible for modifications. That determination is supposed to be made based on a calculation using factors like the borrower’s income and equity in the home, but the process is beset with errors, in part because the Treasury Department has failed to issue specific guidelines and standards for servicers to follow, according to the Huffington Post. The number of struggling homeowners rejected from HAMP in error “could range from a handful to thousands,” the report says, and yet the Treasury “has yet to establish specific consequences or penalties for noncompliance,” and has issued no fines. [Huffington Post]

[more]

Bank of America is planning to forgive up to 30 percent of loan principal for homeowners whose mortgages are at least 60 days delinquent and who owe more than 120 percent of their home’s value, the company announced today. The program, aimed at borrowers with who are severely underwater on the riskiest kinds of loans — specifically, subprime loans and adjustable-rate mortgages — will target principal reductions as the first course of action in keeping struggling borrowers in their homes. The Obama administration’s Home Affordable Mortgage Program considers affordable loan payments to amount to no more than 31 percent of household income, and the bank said it would consider interest rate reductions if that target is not met after reductions in mortgage principal. Beginning in May, the bank expects to offer $3 billion in total principal reductions to 45,000 qualified customers. TRD

Just 10 percent of real estate agents think Obama’s Home Affordable Mortgage Program has actually slowed the rate of foreclosures, according to a survey released yesterday by national real estate listings site Homes & Land. Sixty-five percent of agents believed that the HAMP initiative had definitely not helped, while the rest were unsure. The survey, conducted in February, culled responses from almost 5,800 agents in local markets across the country. More than half of respondents had been working as real estate agents for more than 10 years. Despite the perceived HAMP failure, most agents were optimistic about market conditions: 58 percent said consumer interest in purchasing a home had increased over the past three months. TRD

Today is the one-year anniversary of the Obama administration’s announcement of its Home Affordable Mortgage Program, and it comes with good news. The program, which aims to keep borrowers in their homes by modifying their mortgage payments, has crossed the 1 million mark in trial modifications granted and has seen permanent loan modifications double in January to over 116,000 from just over 66,000 in December, CNBC’s Diana Olick reported. However, critics say the improvements are too meager to make much of a difference, with 5.6 million borrowers delinquent on their mortgages and only two-thirds of HAMP participants current on their modified payments. Meanwhile, just 12 percent of participants have seen a permanent reduction in their mortgage payments since the program began. Roughly 51,000 trial modifications have been cancelled as a result of non-payment or lack of documentation, Olick said.

Borrowers participating in the Obama administration’s Home Affordable Modification Program will soon have a simpler route to mortgage loan modifications. Under new guidelines, borrowers seeking to lower their mortgage payments will be required to provide just three items to servicers: a form requesting the modification, authorization for the servicer to access tax information from the Internal Revenue Service and evidence of income, the Treasury announced yesterday. The HAMP program, launched one year ago, has been widely criticized for its low success rates in turning three-month trial modifications into permanent ones, and borrowers and servicers alike had pointed to complex documentation requirements as one of the major stumbling blocks. Roughly 900,000 borrowers had been given trial modifications by the close of 2009, but only 66,465 of those had been converted to permanent ones. Beginning June 1, servicers will also have to gather the documents prior to granting trial modifications in order to avoid beginning the process with borrowers who ultimately won’t be able to come up with the paperwork. [WSJ]

Aurora Loan Services, a subsidiary of Lehman Brothers, has been charged with denying four Brooklyn and Queens residents access to the Obama administration’s Home Affordable Mortgage Program. The program, which helps borrowers stave off foreclosure by refinancing their home loans, provides capped incentives to servicers who participate. The plaintiffs, represented by the Legal Aid Society of New York City, have alleged that Aurora refused to consider their loans for modification under the program and that Treasury officials did not step in to protect their rights to due process. The class action lawsuit was filed in federal district court in Washington, D.C., and seeks to force Aurora to provide reasons for denial of access to HAMP, as well as prior notice and an appeals process. [Housing Wire]