Ocwen Financial Corp. and other servicers of subprime loans are following the HAMP model by recognizing payment forbearances and writing down the principal amount of the loans, according to Amherst Securities Group.
After acquiring the servicing portfolio of
“The writedown reflected catch up’ loss recognition on unreported forbearance as a result of previous loan modifications,” the new ASG report says.
Home Affordable Modification Program guidelines issued in 2010 recommend that servicers write down forbearances after servicing transfers unless prohibited by the pooling and servicing agreements.
Even though servicers complete more proprietary loan modifications than HAMP mods, ASG says, “the majority of servicers appear to follow the HAMP blueprint.”
Fitch Ratings recently indicated that “Nationstar intends to write down the unreported forbearance amount” on loans previously serviced by Aurora, the July 3 ASG report says.
