HAMP Architect Makes Case for Keeping Program

Ending the Making Home Affordable program would increase avoidable foreclosures and put the fragile housing market in worse shape, the program’s director told an audience at the SourceMedia Mortgage Servicing Conference in Dallas.

Laurie Anne Maggiano, director of policy in the Treasury Department’s Office of Homeownership Preservation, defended the program that she helped create, in light of Congressional criticism that the Home Affordable Modification Program was a “failure and complete waste of taxpayer money,” and a House of Representatives vote to end the program.

Ending MHA would “entrust all efforts to stop foreclosure in the hands of servicers,” Maggiano said, noting those same servicers are being sued by all 50 state attorneys general and criticized politically and in the press for their actions in the housing crisis.

Maggiano acknowledged HAMP has faced its share of challenges: early on, it was slow to get started, the program was not as broadly effectively as originally hoped and servicers faced difficulties executing the program. But Maggiano said through a series of revisions and tweaks, HAMP and MHA have improved and need more time to reach their full potential.

When it was announced in March 2009, HAMP was projected to help 3 million to 4 million borrowers obtain mortgage modifications. Two years later, and only 635,000 borrowers have successfully lowered their mortgage payment through the program.

But Maggiano said MHA is responsible for pushing the mortgage industry toward other private-label modification efforts, which have resulted in an additional 2 million modifications.

The Hope Now alliance, the voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and nonprofit counselors, as well as Treasury and the Department of Housing and Urban Development, reported that 1.24 million proprietary loan modifications were completed in 2010. Hope Now, which was formed in 2007, has its own modification program that its bolstered by the Hope LoanPort, a technology platform housing counselors use to transmit modification applications and supporting documents to servicers.

Maggiano outlined three goals for MHA in 2011. Servicer accountability will be enforced with new scorecards and servicers will be ranked against each other. The customer experience will be improved with new mandatory communications to borrowers on the verge of foreclosure and the creation of the Treasury’s Homeowner Advocacy Office, which will review special cases and step in to assistant borrowers having difficulty obtaining a modification from servicers.

Lastly, Maggiano called on the mortgage servicing industry to help Treasury in sharing success stories of borrowers who received HAMP modifications. Maggiano said borrowers have a tendency to distrust their servicer and don’t fully understand the MHA program.

“The Treasury can’t allow itself to be distracted by discussions of HAMP’s imminent demise,” Maggiano said.

“We are not doing this to bolster our image, but to end the cycle of despair.”