California Loans News

Criticisms and praises are mixed reactions for the Obama administration’s Home Affordable Modification Program (HAMP). Another problem is that some troubled homeowners who are qualified applicants turn out to be rejected due to bank errors. It was also because no legal recourse could be utilized in disputing the decision. The oversight is also projected to worsen as defaults continue to increase, and then servicers are faced with much more work volumes. Such overload is supported by the Realty Trac report of 3.5 million foreclosures to occur in total before the year ends.

Kevin Stein of the San Francisco-based California Reinvestment Coalition said, “If the servicer messes up, even by accident, there is no meaningful way to complain, no real appeals process, no viable ombudsman to consider. Most importantly, there are no consequences to the banks for failure to do what they have promised to do.”

DSNews reports said, “It’s unclear just how many borrowers might find themselves in the same bureaucratic purgatory, chiefly because the government hasn’t been keeping track of rejections caused by typographical errors, lost mailing and faxes, or surly or untrained customer service workers.”

The Treasury Department said on the other hand, “Far too many borrowers are being disqualified from HAMP for the wrong reasons.” The Department had lately ordered Freddie Mac to organize another auditing process for lending agencies like banks under the former’s lending purview. Treasury spokesperson Meg Reilly said, “In every reported case of eligible borrowers being denied modifications, we worked with the servicer to correct the problem.” Concurrently, there are 1,000 files are reviewed on a weekly basis.

Moreover, the administration has been telling lending companies to put up their respective procedure for appeals. The administration also requests the lenders to provide appropriate explanation whenever a borrower would be evaluated as ineligible for the assistance program. Penalties are set for companies that would not comply with the said measures.

Conversely, lenders and servicers are arguing that the workload may be too immense especially in avoiding honest mistakes. For one, Well Fargo said that this year alone, it already hired approximately 6,000 new personnel for reviewing the applications. It also maintains a new appeals process institution.

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