The Administration’s Housing Scorecard for May 2011 was recently released, giving detailed assessments of the ten largest lenders participating in the Making Home Affordable Program, which includes the Administration’s own Home Affordable Modification Program (HAMP).
The Housing Scorecard rates the performance of lenders in three categories:
- identifying and contacting homeowners;
- homeowner evaluation and assistance; and
- program reporting, management and governance.
Based on the May 2011 assessment of these objectives, the lenders who need “substantial improvement” are:
- Bank of America, NA (BofA);
- JP Morgan Chase Bank, NC;
- Ocwen Loan Servicing, LLC; and
- Wells Fargo Bank, NA.
The Department of the Treasury (Treasury) is withholding financial incentives for BofA, JP Morgan Chase and Wells Fargo while they address all areas in need of improvement. The Treasury is not withholding incentives from Ocwen since their results were negatively affected by a large portfolio acquired during the compliance testing period.
first tuesday take: Be assured, dear reader, a slap on the wrist from the government will do little (if anything) to whip these Fed-fed lending behemoths into shape. HAMP has been a colossal failure in California, all owing to the government’s refusal to make participation in the program by lenders mandatory.
The government is very conflicted as it does not want lenders to fail, and the biggest of them surely would if they were forced to do what the government tells the public they’d like to see them do. [For more information regarding HAMP, see the February 2011 first tuesday article, HAMP loan modifications remain scarce.]
The Housing Scorecard does point fingers at specific offenders — the worthless blame game — but offers no resolution for homeowners caught between the hope of a modification promised by HAMP and the noncompliance of their lender. What are they supposed to do in the mean time?
first tuesday’s suggestion will always revert back to the only alternative when there is no cramdown in sight: strategic default. The strategy of defaulting and forcing the lender to buy the property for the amount of the loan is objectively simple. However, it is very emotional for the homeowner and seemingly immoral — an ideology fiercely encouraged by lenders.
Until the government shifts the power to mandate judicial cramdowns back to bankruptcy judges and forces lenders to empty out their shadow inventory by foreclosing and declaring their losses, loan modifications will remain scarce. [For more information regarding judicial cramdowns, see the November 2010 first tuesday article, Lenders unwilling to reduce principal balances under California’s ‘Keep Your Home’ program and the January 2010 first tuesday article, Cramdowns, cramdowns, cramdowns!]
Re: “Obama Administration releases May housing scorecard featuring new Making Home Affordable Servicer Assessments, regional spotlight on phoenix housing data” from the Department of the Treasury