First Lender Loan Modification Rankings Issued

The first "report card" on how well lenders are doing in modifying mortgage loans under the Making Home Affordable Program (MHA) has been released, and there's a big difference between the top and bottom of the class.

JP Morgan Chase and GMAC Mortgage posted two of the best performances among the 38 loan servicers participating in the MHA Program, with both initiating trial loan modifications for 20 percent of eligible borrowers more than 60 days delinquent on their mortgages.

Among the major lenders, Bank of America had one of the lowest rates of trial loan modifications, at only 4 percent of eligible borrowers, closely followed by Wells Fargo at 6 percent. Bank of America also includes loans formerly serviced by Countrywide, which it acquired at the end of last year.

Overall, smaller lenders tended to have higher rates of trial loan modifications begun than larger loan servicers, apparently due to greater operational flexibility that enabled them to get their MHA operations up and running more quickly.

Only 9 percent of delinquent mortgages modified

Nationally, 235,000 at-risk mortgages have begun trial loan modifications under the program to date, or about 9 percent of the 2.7 million seriously delinquent mortgages held by the 38 participating servicers. Trial loan modifications are finalized after a three-month period, provided the homeowner is able to make timely payments under the modified payment schedule.

The administration has called for 500,000 trial loan modifications to be in place or completed by Nov. 1, which would more than double the number begun in the first five months of the program. The report says that more than 400,000 loan modification offers have been extended by participating lenders, (representing 15 percent of 60-day plus delinquencies) but does not explain the disparity between the number of offers extended and trial modifications begun.

It is not clear whether they represent offers that have not yet been accepted or were declined by homeowners, loan modifications that have not yet entered the trial phase or a combination of all three or other factors. A call to the Treasury Department seeking clarification was not returned in time for this article.

Program called on track to meet goals

The administration did say the current numbers show that it is on track to meet its original goal of 3-4 million loan modifications over the next three years. The program has previously been criticized for falling short of that goal in its first five months.

The 38 mortgage servicers participating in the program represent about 85 percent of all U.S. mortgages, a number that has been gradually increasing as the program goes along. No information was included on when a particular lender signed on to the program, which may account for the handful of lenders who have offered or initiated zero loan modifications to date.

The announcement and a link to the two-page report are available on the Treasury Department web site.