Some of the Federal Housing Administration's largest servicers lacked the technology and staff to expedite the processing of loan modifications, and were unprepared to deal with the escalating backlog of requests, according to FHA commissioner David Stevens.
FHA initiated a review of its five largest servicers in May, analyzing their servicing and loss mitigation operations. The agency's review is ongoing.
"The field analyst reviews suggest that some servicers may lack knowledge of the FHA loss mitigation process," Stevens told a congressional panel Thursday morning.
FHA is working with its top servicers to address the problems and improve their loss mitigation performance.
"This includes extensive consultation with servicers' senior management and assigned work groups, customized training and planning assistance, and ongoing evaluations of the servicers' progress in correcting deficiencies and improving compliance," Stevens testified.
FHA plans to conduct reviews of the next five largest FHA servicers in the winter and early spring, according to Vicki Bott, head of the agency's single-family program.
The government insurer plans to subject all of its servicers to these "broad in-depth" servicing reviews. "We will take action where necessary," Bott said at a property preservation conference earlier in the week.
