Monday, January 18, 2010

Never Mind Who's On First; Where Is First?

In the on-going saga of the Making Home Affordable Program, which spawned HAMP and HARP, no less a giant in news than the New York Times, carried what seems to be directly contradictory information about the program's success/failure.

In the Saturday January 16th edition the Times ran two stories: "JPMorgan Chase Earns $11.7 Billion" by-lined to Eric Dash, and "U.S. Mortgage Plan Aided 7 Percent of Borrowers" by-lined to Sewell Chan. Both stories are well-written and intriguing, but neither can be accurate. The problem is that no one knows the truth.

Eric Dash recites that JPMorgan has been so successful that it has $26.9 billion set aside for employee bonuses. That is attributed in large part to the fact that the " has agreed to temporarily modify 600,000 mortgages. Only about 89,000 of those adjustments have been made permanent." Mr. Sewell, in his news story states that "Mortgage payments have been permanently lowered for more than 66,000 borrowers under the Obama administration's $75 billion program to protect homeowners from foreclosure..." He goes on to write "as of the end of December, they said [Treasury and HUD] more than 853,696 homeowners were actively in the modification program... The figure includes 787,231 trial modifications and 66,465 permanent modifications"

Assuming the number of trial modifications is correct in both stories, that means that all other lenders COMBINED account for only 253,696 modifications - less than 29%. Has JPMorgan really outpaced ALL OTHER LENDERS COMBINED and done 71% of all modifications? And if Treasury and HUD are reporting only 66,465 permanent modifications, how has JPMorgan Chase managed 89,000? That would mean that JPM Chase has done all of the reported HAMP modifications and 23,000+/- of their own!

The reality is that NO ONE KNOWS! Further, the Treasury Department and Housing and Urban Development do not have a clue about what is really happening "in the trenches". Yesterday I received an e-mail from a client who had applied for and been approved for a trial modification. Now, 4 months later, after making all of the required payments, she received a letter from the venerable JPMorgan Chase asking for a "complete Trial Modification Package".

This scenario is playing out in 1/2 of my clients going through HAMP. Who knows what the percentage is nationwide? The program is not bad, it's just that no one is in charge. Washington feels good because "they" can say that "they" have committed $75 billion to help the entire country - 4 million homeowners. It's not working! (And think about the amount of money - $75 billion for all 4 million (and increasing) mortgages in trouble: $26.9 billion for bonuses at JPMorgan Chase Investment Banking.)

HAMP and HARP are disasters - there is no enforcement of the rules set out by Treasury and HUD. There is no monitoring on an institutional basis. All reporting is unaudited. What is worse, there is no one for a borrower seeking help to call.

The lenders/servicers have call centers staffed with people who try to be helpful but just do not have much information. They read from a computer screen to tell borrowers what they need to supply to apply. The call center folks may have an FAQ section to which they can refer. But, if there is a problem such as the one my client has, where she is being asked to start over, there is no one who can help her. The call center people will say that documents have been received and processed but they cannot fix the problem of the new request; nor is there anyone else with whom the borrower can speak. Give up? Do Not! Ask for a supervisor, send in new documents, certified, return requested mail.

Next installment - what to do until the Doctor comes. An outline of how to navigate MHA a/k/a HASP and the off-spring HAMP and HARP

Author's Copyright by Richard I. Isacoff, Esq., January 2010

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