Home Affordable Loan Modifications Begin
If you’ve been following our coverage of President Obama’s Home Affordable Loan Modification program, you’re well aware we’ve been waiting over a month for loan servicers to get their processes figured out.
The program was announced March 5th and just yesterday, Ocwen Financial Corporation announced they have begun accepting applications. And…they’ve also increased the their staff by over 65%! So while you’ll probably have to wait, maybe it won’t be as long as you think?
Many industry experts agree that Ocwen’s processes and computer systems allow it to move more quickly than most traditional servicers, which is probably why they’ve been first to respond to the Home Affordable Modification guidance. As a matter of fact, according to Ocwen, their customized loan mod packages have a much lower re-default rate than most of the industry.
A re-default is when a homeowner has a successful modification to their mortgage and then goes into default again within a few months after they start the program. Services have been struggling to get their re-default rates below 50%. That’s why many servicers have such stringent requirements before they’ll modify a loan…they don’t want you to re-default and have to go through the whole foreclosure and/or loss mitigation process again.
But Ocwen has been able to get their re-default rate of only 24% after 6 months, while the industry average is 41% of modified loans re-defaulting within 6 months. Even though the vast majority of Ocwen’s customers have sub-prime loans, they have still acheived this remarkably low re-default rate.
If Ocwen Services Your Loan
If Ocwen is your servicer and you believe you qualify for a Home Affordable Loan Modification, you should download the paperwork you need to fill out and send in to Ocwen. This package also lists the verification documents you need to submit.
What Happens After You Apply?
According to the Ocwen web site:
Please understand that until you send us the required information listed in the financial package in the link below, it is not necessary to speak to one of our representatives because we will need to have this information in order to identify the possible options that may be available to you.
Do not delay! We encourage you to send this information as soon as possible. It is very important that the information is accurate, complete and legible. Please send copies. Do not send originals.
Once we receive the required information, please allow 10 days for us to respond. You will then receive a phone call or a letter from us.
What If You Don’t Qualify?
If you don’t qualify under the President’s modification plan, you should apply under Ocwen’s normal modification initiative. You can get more information at the Ocwen web site.
What If Ocwen Doesn’t Service My Loan?
If Ocwen isn’t your servicer, this is still good news for you because it means we’re one step closer to major servicers coming on line.
As I posted Monday, Bank of America/Countrywide expects to begin taking Home Affordable Modification applications within a couple weeks.
Foreclosure Moratorium Ends
Unfortunately, though, many lenders are beginning to process foreclosures again after several months of a foreclosure moratorium. According to the Wall Street Journal today, J.P. Morgan Chase, Wells Fargo, Fannie Mae, and Freddie Mac all say they’ve begun processing foreclosure actions again. The other major lenders probably won’t be far behind unfortunately.
I’d expect most of the major servicers to begin processing Home Affordable Loan Modifications before the end of April. If you get a foreclosure notice from your servicer in the mean time…contact them immediately.
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