SIGTARP REPORT | More Than 7 Out of 10 (70%) Homeowners Were Turned Down From Their Servicer for HAMP

“We also report that 70% of homeowners who applied for HAMP got turned down, with JP Morgan Chase, Bank of America, and Citi, each turning down 80% or more and Ocwen denying more than 70% of the homeowners.”

 

SIGTARP for the Troubled Asset Relief Program Advancing Economic Stability Through Transparency, Coordinated Oversight, and Robust Enforcement Quarterly Report to Congress July 29, 2015

ONLY 30% OF HOMEOWNERS WHO APPLIED FOR HAMP GOT IN, 70% WERE TURNED DOWN BY THEIR SERVICER

At the start of TARP, our nation was in a foreclosure crisis. More than two million homeowners had foreclosures commenced against them in 2008.1 TARP is not supposed to be just a bailout of the largest financial firms, but was always supposed to include a bailout of homeowners at risk of foreclosure. Congress rejected Treasury’s initial proposal that TARP just be a bailout of some of the largest financial firms. Instead, in recognition of the foreclosure crisis, Congress made foreclosure mitigation an express part of the law authorizing TARP. Among other things, preserving homeownership is an explicit purpose of that law, and “the need to help families keep their homes” is one of the considerations that the Secretary of Treasury is required by law to consider in exercising his authorities under TARP.2 As SIGTARP reported in its March 25, 2010, audit report,i a working group of officials from Treasury, the Department of Housing and Urban Development, and the White House developed the outlines of a mortgage modification program that was intended to “have a scale that can have a real impact on turning the housing problems around in this country.” In February 2009, the Administration announced its signature TARP housing program known as the Home Affordable Modification Program (“HAMP”) to “enable as many as 3 to 4 million at-risk homeowners to modify the terms of their mortgage to avoid foreclosure.”3 Treasury designed HAMP to encourage mortgage servicers, on a voluntary basis, to modify eligible mortgages so that the monthly payments of homeowners who are in default or at imminent risk of default will be reduced to affordable, sustainable levels. To encourage participation, Treasury pays incentives using TARP funds. HAMP was initially a $75 billion program: $50 billion to be funded by TARP funds for Treasury’s part of HAMP (to modify mortgages not owned by the Government–sponsored enterprises Fannie Mae and Freddie Mac), plus $25 billion for GSE-owned mortgages.4 Although this allocation was reduced to $29.8, approximately $18.5 billion in TARP funds remains unspent and available for HAMP as of June 30, 2015.5 Although participation in HAMP is voluntary, servicers who agree to participate are required to offer HAMP modifications to all eligible homeowners. The actual execution of HAMP lies in large part with participating mortgage servicers, whose employees are responsible for reviewing homeowner HAMP applications and deciding whether a homeowner gets into HAMP or not. A servicer must follow the HAMP rules in making its decision, and Treasury has an oversight responsibility to ensure that servicers follow Treasury’s HAMP rules.ii [...]