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New March Mortgage Mod Data: Cancellations Jump, Logjam Continues

As expected, the number of homeowners being denied permanent mortgage modifications has increased sharply. And some 367,000 homeowners remain in limbo, stuck in trial modifications that have lasted longer than they are supposed to.

Justin Sullivan/Getty ImagesNew data released by the Treasury Department on Wednesday shows that mortgage servicers booted about 68,000 homeowners from the government’s mortgage modification program in March: That’s more than the 61,000 homeowners who began a permanent modification last month. Homeowners are eligible to receive the permanent modification after a trial period that is supposed to last three months.

We reported in February that a jump in disqualifications was expected. That rise is now upon us. Homeowners can be dropped from the program if they can't keep up with their reduced payments, they don't provide  needed documents, or the servicers determine that they are ineligible.

Some 367,000 homeowners remain in limbo, stuck in trial periods that have lasted longer than they are supposed to. One silver lining: the current number of permanent modifications, 228,000, is still greater than the number of homeowners who’ve been dropped from the program, 158,000.

You can see our interactive breakdown of the data here. It shows the cancellations at each servicer, as well as which servicers (the biggest banks) are primarily responsible for the continued logjam.

As we’ve reported, delays and confusion on the part of servicers have been a reality for homeowners since the program started a year ago. Treasury has promised to crack down on servicers like JPMorgan Chase that strand homeowners in trials, but the backlog continues. As of last July, Chase had begun 79,000 trials. By the end of March, it had reported final resolutions for only 57,000 (31,000 permanent modifications, the rest canceled). That means 22,000 homeowners still hadn’t gotten an answer after eight months.

According to a report issued Wednesday by the Congressional Oversight Panel, reliable information on the reasons for cancellations won’t be available any time soon. Treasury only started collecting such information in February, and the panel said that servicers had provided reasons for less than a third of the denials.

A jump in cancellations had been expected for a number of reasons. It was always expected that a large portion of homeowners would be dropped, either because they couldn’t make the payments or because of disqualification. Treasury officials expect a failure rate between 33 and 50 percent. The servicers have been slow to report cancellations, both because of the backlog (they’ve been slow at everything) and because the Treasury Department has required them to review a number of denials before making them final.

Some servicers have canceled more trials than they’ve begun permanent modifications. The largest among those is Citigroup’s servicing arm CitiMortgage, which has canceled 28,000 trials while granting only 22,000 permanent modifications. Aurora Loan Services, a subsidiary of the bankrupt Lehman Brothers, has canceled 16,000 trials, and has only 10,000 permanent modifications.

Note: Starting this month, we’ve changed the way we’re estimating the number of homeowners in limbo. In the past, we termed any trial that was over three months as in limbo, because that’s how long the trial is supposed to last. Our new method is more conservative, allowing for an extra one month lag in reporting the final resolution: So "limbo" is now over four months, not three. We think this gives a clearer picture of which servicers have been slow to provide final answers to homeowners.

See our interactive breakdown of the data here.

I know you ran a recent story about people not receiving the help they need.  This is something ProPublica should investigate further.

Fannie Mae and Freddie Mac are well known, but my son-in-law is an out of work school teacher attempting to get a loan modification for a Ginnie Mae backed loan and finds himself and my daughter at the mercy of Chase Bank.  What is this all about?  And why, according to Ginnie Mae policy, must my kids stop doing the right thing by making payments and instead be 3 months delinquent before they can be considered for help?  Isn’t this begging for people to not make their payments?  What kind of sheer stupidity is this?

And, it appears to be a very cozy relationship indeed when Chase, the lending institution, can dictate what they will and will not do to the government agency they are insured by and apparently sole sourced with.  There is something very fishy about this, and it smacks of pandering and wrongdoing.  Here is the link to the letter from Ginnie Mae’s site that explains it all, and completely backs the agency away from any responsibility for the mortgages it insures: http://www.ginniemae.gov/apm/apm_pdf/10-01.pdf.

Somebody should look into this and fix this wagon before it leads to even more foreclosures and another bailout.  More to the point, somebody should look into this so a couple of deserving young adults can get the help they need, a teaching job for my son-in-law and the means to stay in their own home.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

More »

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