Some lenders take persistent steps to save mortgages
In the year since the government launched its program to save up to 4 million homeowners from foreclosure, more than 1 million have qualified for trial modifications, but only about 116,000 have received permanent adjustments. Borrowers who make their payments in the three-month trial period qualify for permanent modifications.
GMAC, the former financial arm of General Motors now controlled by the government, has one of the best records for converting trial modifications into permanent ones.
One reason is it requires homeowners to provide documentation before they go into trial modifications. Other mortgage servicers have waited until borrowers finish the trial to ask for documents.
As of January, GMAC had modified 17.5% of the delinquent mortgages it services compared with 3.4% for lenders overall, according to the Treasury Department.
“When we give someone a trial modification, we want to give it to someone that can afford it and is likely” to get a permanent modification, says Jeannine Bruin, a GMAC spokeswoman.
Starting June 1, the government will require all servicers to obtain documentation upfront.
Some lenders say they are making aggressive outreach efforts. JPMorgan Chase says it will call customers up to 36 times and send up to 15 mailings, if necessary, to get appropriate documents. It has 2.4% of eligible homeowners in permanent modifications.
“It’s really being persistent. We assign homeowners, really, to a document chaser,” says Chase spokesman Tom Kelly.
Chase uses outside contractors to go to borrowers’ homes to get documents. CitiMortgage, which has 4.4% of eligible homeowners in permanent modifications, has sent contractors to homes to help borrowers complete documents.
CitiMortgage also says it has assigned employees from different departments to work in groups to take calls, accept forms and review documents.
“It worked much faster rather than having three different departments,” says CEO Sanjiv Das.