A local family receives counseling support during a January foreclosure prevention clinic at Lowell’s Coalition for a Better Acre.
National mortgage servicer coalition HOPE NOW seemingly changed its tune last week and announced its members have adopted a “uniform set of procedures and guidelines” they will use to help mortgage borrowers facing foreclosure.
The organization had formerly advocated for resolving problem loans on a case-by-case basis.
Massachusetts Mortgage Bankers Association Executive Director Kevin Cuff said it’s interesting that after criticism from some corners that they haven’t helped many borrowers, HOPE NOW servicers have agreed to a set of standardized loan workout methods.
He said he thinks their reasons come down to “something between political pressure and financial reality.”
Lenders and servicers probably now have direction from loan investors allowing to adjust their policies, Cuff said – and they’ve probably also realized they’ll have more fore-closed-upon properties than they know what to do with if they don’t adjust.
HOPE NOW Executive Director Faith Schwartz said the guidelines, which 27 loan servicers including Countrywide, Ocwen and Wells Fargo have agreed to, is a natural step forward in the eight-month-old coalition’s continuing efforts to improve outcomes on defaulting loans.
“I wouldn’t describe it as a shift,” she said. Rather, the new policy makes servicers’ actions related to loan workouts “more transparent.”
New Commitments
Schwartz said servicers have committed to:
• meeting specific workout timelines of five days to acknowledge a borrower’s inquiry on a problem loan, 45 days or less to make a decision on whether a modification or other solution can be worked out, and status updates to borrowers once a month
• that subject to investor approval, they “should” use specific loss mitigation guidelines such as temporary forbearance on payments, permanent modifications of loan terms such as permanently adjusting an interest rate, or allowing “short sales” for less than the amount owed on the mortgage, as long as the homeowner is cooperating with these efforts
• that second-mortgage holders “should,” subject to investor approval, agree to carry over that position if a loan is refinanced, as long as the first-lien amount is not in-creased or as long as the homeowner’s monthly payments on the first mortgage do not increase as a result of the refinance
Emily Rosenbaum, executive director of Coalition for a Better Acre, a Lowell non-profit that assists borrowers facing foreclosure, said anything that will move along workouts or expedite modifications of problem loans stands to help borrowers.
Countrywide, for example, had been requiring borrowers to pay 30 percent of the balance they owe before allowing any modifications, she said.
Many distressed borrowers now have to wait three weeks before a servicer staff member is assigned to their case, and another three weeks for a decision, she added, noting that if the decision is a denial, they have to start the process all over again – which severely limits the possibility of offers to buy a troubled property remaining viable.
Many of CBA’s clients have loans serviced by HOPE NOW members.
Servicers agreeing to the new guidelines are Acqura Loan Services, Assurant, Aurora Loan Servicers, Avelo Mortgage, Bank of America, Carrington Mortgage Services, Chase, Citigroup, Countrywide Financial Corp., EMC Mortgage Corp., First Horizon Home Loans, First Tennessee Home Loans, GMAC ResCap, Home Loan Services, HomeEq Servicing, HSBC Finance, Indymac Bank, LandAmerica Financial Group/LoanCare Servicing Center, Litton Loan Servicing, National City Mortgage Corp., Nationstar Mortgage, Ocwen Loan Servicing, Option One Mortgage Corp., Saxon Mortgage Services, SunTrust Mortgage, Washington Mutual, Wells Fargo & Co., and Wilshire Credit Co.
