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Six Servicers Sign to Federal Mod Program

The Obama administration has released the names of the first six mortgage companies to officially ink their commitment to participate in the government's Home Affordable Modification Program (HMP).
""Chase Home Finance"":http://mortgage.chase.com, a division of J.P. Morgan Chase; ""Wells Fargo"":http://www.wellsfargo.com; ""CitiMortgage"":http://www.citimortgage.com, Citigroup's servicing arm; ""GMAC Mortgage, Inc."":http://www.gmacmortgage.com; ""Saxon Mortgage Service, Inc."":https://www.saxononline.com; and ""Select Portfolio Servicing"":https://www.spservicing.com/ all signed HMP servicer participation contracts this week. The companies have agreed to follow federal guidelines to lower struggling homeowners' mortgage payments in exchange for incentives from the government.
The administration issued ""initial allocations"":http://www.financialstability.gov/docs/transaction-reports/4-15TransactionReport.pdf of the capital payments each institution is expected to receive for their participation, but noted that the amounts were subject to adjustment dependent on individual servicers' execution of the program. Chase could receive up to $3.5 billion for the mortgage modifications it makes. Wells is eligible to get $2.9 billion. Citi could receive a little over $2 billion. GMAC has been allocated $633 million, Saxon could get up to $407 million, and Select Portfolio Servicing is expected to receive $376 million.
All in all, the government has estimated about $9.9 billion in incentive payments for these first six participants. The administration has said it will commit $75 billion to the program, $50 billion of which will come out of the $700 billion bailout fund, with the remaining cash provided from other government sources.
""GMAC Mortgage"":http://media.gmacfs.com/index.phpxs=43&item=316 said it began preparing for the federal mortgage relief program shortly after it was announced by President Obama. The company said to date, it has distributed more than 100,000 financial packages to homeowners who are potentially eligible for modifications under HMP. And to accommodate the increased customer activity, in part driven by the Making Home Affordable modification and refinance programs, GMAC said it has begun adding staff to its nationwide lending and servicing centers.
The administration said it expects to finalize participation agreements with other companies in the coming months, but according to HUD Secretary Shaun Donovan, Making Home Affordable efforts are already well underway at a number of banks and servicers across the country. Donovan told the _""Associated Press"":http://www.ap.org_ on Wednesday that mortgage companies ""weren't waiting to sign the contracts to get going,"" and ""have already taken hundreds of thousands of applications for refinances and modifications.""
""Ocwen Financial Corporation"":http://dsnews.comindex.php/home/news_story/2839, a leading subprime servicer, is one of the organizations to get started early. The Florida company announced on Monday that it has already begun performing loan modifications under the federal guidelines, one of the first to do so, even before signing a contract for participation in the program.
And ""Bank of America"":http://dsnews.comindex.php/home/news_story/2824, which services one out of five mortgages in the United States, announced that it began processing its first wave of mortgage refinance applications under the Making Home Affordable program last week.
The modification piece of the government's housing program is expected to provide much-needed mortgage relief to three to four million homeowners across the nation. The refinance aspect of the program will lower payments for another four to five million who have home loans through Fannie Mae or Freddie Mac.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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