Return on Quality

At the launch of HAMP (Housing Affordable Modification Program), the Treasury Department and the Department of Housing and Urban Development (HUD) set as their goal the modification of 3m to 4m mortgages.  Through December 2009, approximately 850,000 borrowers had been placed into trial modification programs and 66,000 had been placed into permanent modifications.  Hardly a blistering pace.

We outlined some of the issues with the structure and deployment of the program in our HAMP Best Practices article published in the December 2009 issue  of Servicing Management magazine.  Mentioned in that article were the documentation requirements of the program, which slowed the process down.  In recognition of this, Treasury and HUD have released new requirements for upfront documents and guidance on permanent modification conversion.

Effective for all trial period plans with effective dates on or after June 1, 2010, a servicer can only evaluate a borrower for HAMP after receiving an initial package that includes a request for modification and affidavit (RMA) form; the Internal Revenue Service (IRS) 4506T-EZ form, which gives servicers the ability to pull the borrower’s tax return; and two pay stubs from the borrower for proof of income.

Said Herb Allison, the assistant secretary for the Treasury: ““We’re making it as easy as possible for homeowners to provide the documents. A lot of the problem of converting the trial mods to permanent mods has been time delay between the verbal communication about their eligibility to actually getting the documents and sending them in.”

Every little bit helps.

Image by Peregrine Blue 

As a consequence of the financial crisis, we are undergoing wholesale change in the regulatory environment of real estate finance.  The changes are coming hard and fast and continuously, making it difficult to establish and manage new business processes.  How do you keep up?

There’s no single answer to this question.  We have clients who take it on themselves to keep abreast of regulatory changes because they want full control over their regulatory compliance.  Other lenders want to outsource the management of change and turn to third parties to keep them up to date. 

Wherever you fall in the spectrum, you will probably welcome any tools that ease the burden of staying current.  And such tools are cropping up.  For example, Wolters Kluwer has just launched ”The Reg Z Center“, a free online resource which provides an overview of the changes affecting loans covered by Regulation Z, the effective dates for changes and suggested solutions for implementing changes. 

Being a for-profit entity, the company does promote its compliance solutions on the site.  But this is in keeping with the ‘Web 2.0′ business model, whereby useful information is provided for free, interaction among interested parties is encouraged (via a forum, blog, or discussion group), and a long-term relationship is cultivated while simultaneously establishing credibility.

The Reg Z Center joins the company’s other similar resource centers for Fair and Accurate Credit Transactions (FACT) Act “red flags” and the Real Estate Settlement Procedures Act (RESPA).

It’s official.  Version 2.0 of CogentQC.NET has now been released.  You may have seen the news in Housingwire or MortgageOrb but if not, you can find the Cogent news release here. 

2009 was an unusual year for client IT departments (unless it’s actually “the new normal”, God forbid.)  After the mortgage crisis and economic meltdown, it seemed like IT staffing and budgets were reduced and lenders were stuck in neutral, reluctant to take any steps other than cost-cutting.  IT staff had too many projects to handle and consequently Cogent saw only a handful of clients upgrading to CogentQC.NET.

However, the end of 2009 saw an acceleration of activity.  We now have enough upgrade projects to take us through the first quarter, at least.  And as business gets back to normal, we have even begun to talk with clients about enhancements to their systems that will automate and optimize more of their business processes. 

It’s going to be a busy year.

If you’re interested in the world of mortgage servicing, MortgageOrb has just published an interesting overview of the major milestones of 2009 and what to expect in 2010.  With input from several industry veterans, the article surveys the changing role of the servicing function, the performance of various government programs designed to ease the mortgage crisis, the conflicts of interest between servicers and investors, the potential impact of millions more ARM resets due in 2010 and 2011, and more.  Well worth a read.