Yesterday, we reported that the federal government had decided to punish 3 major lenders for their failure to adequately implement the Home Affordable Modification Program (HAMP) by refusing to pay promised participation incentives. U.S. Treasury Officials said that they did not believe that the decision would impact the lenders’ willingness to perform loan modifications, but rather thought that the action might “shame” them into improving their practices. Thus far, they don’t sound very ashamed.
Wells Fargo promptly issued a statement saying that not only is the lender “formally disputing” the findings that led to the decision, but that they contradict other Treasury findings that show that Wells Fargo has, in fact, been highly responsive to criticism and improved its processes dramatically in the past year[1]. The bank alleges that the report is based on activities over a year old and that it has already addressed many problems. Tim Massad, assistant Treasury secretary, says that the review is based on information no older than the fourth quarter of last year. JPMorganChase issued a statement with similar complaints and criticisms and “respectfully disagrees with the assessment.” Perhaps the most subdued was Bank of America, which simply said that “future reviews will confirm [our progress]” and acknowledged that “improvements must be made in key areas.”
Although Massad stated that he did not believe that the withdrawal of incentives would impact lender participation, other experts disagree. “I wouldn’t be surprised if one of the larger banks withdraws from participation in HAMP program,” said Ed Delgado, a mortgage servicing industry expert and CEO of the Five Star Institute.
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[1] http://www.dsnews.com/articles/servicers-respond-to-treasurys-decision-withhold-incentives-2011-06-09
Tim Massad is absolutely right about banks withdrawing from HAMP.
I said it two days ago when the original story came out, this is actually a way-I’ll bet designed in a secret room somewhere-the banks have a perfect excuse to back out of HAMP and further stop giving out loan mods.
I do not believe it ever was designed to incentivize or shame the banks into doing better but the exact opposite and give them the “out” they’ve been crying for from the beginning.
Why would the banks care about Loan Modifications. They don care why would they wait 30 years to get their money back when the government through the criminal Bail outs and the likes of A.I.G., Fannie Mae are giving the banks 100% on the dollar as insurance for the properties they foreclose on. Why wait 30 years to get a devalued dollar when I can get 100% of my investment back in a few months?