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A Look at Why One Lender Has Succeeded in HAMP While Others Have Failed

February 4, 2010

Our San Bernardino County loan modification attorneys have long believed that lenders' policies are primarily responsible for their success or failure in the federal loan-modification program. A Feb. 2 post on AOL's DailyFinance blog adds evidence to that belief by profiling practices at Ocwen Financial. Ocwen has attracted media attention because unlike the larger lenders, it's got a strong record in the Home Affordable Modification Program. Where Bank of America had converted fewer than 2% of its trial modifications to permanent and Chase had converted 4% as of mid-December, Ocwen had converted 40%. Its redefault rate is also about half of those at the larger banks. The DailyFinance blog concluded that policies in place at Ocwen made the difference.

According to the blog, Ocwen got its start by buying distressed loans, working with homeowners to sort them out and selling them once they increased in value. It has since shifted to loan servicing, but a company spokesman attributed its success to that background. Where larger lenders had to scramble to handle surging delinquencies, Ocwen already had resources allocated. Borrowers work with a single consultant, not whoever happens to answer the phone, and that consultant is chosen for specific personality traits. Ocwen also uses behavioral-science tricks to remind homeowners of their documentation responsibilities. For example, consultants are trained to remind borrowers that the federal government will accept only signed tax return documents as income verification. And perhaps most importantly, Ocwen is willing to modify principal in cases where it believes that's necessary -- about 15%.

As Fullerton loan modification lawyers, we suspect all of these are radically different from the way larger banks handle HAMP. While not every lender has the background and experience Ocwen has in loan workouts, it's not hard for any company to follow the policies and hiring practices outlined in the post. In particular, the policy of reminding borrowers what documentation they must submit seems very basic and sensible. Perhaps more difficult for the larger banks would be imitating Ocwen's willingness to cram down mortgage principal. Financial institutions are notoriously reluctant to do this, despite the multiple studies suggesting it's the best way to keep underwater borrowers from defaulting or walking away. Major banks may believe they cannot afford to do this, but Ocwen, a much smaller company than Bank of America or Chase, appears to be surviving it.

Since the start of the mortgage crisis, Howard Law PC has represented California homeowners who need help negotiating fair, effective modifications to their loans. We are pleased to say we've been able to help numerous clients win significant changes, including changes to repayment periods, interest rates, loan structures or even principal. This is true even in cases where the lender or servicer has made it clear that it's not interested in dealing, by losing paperwork repeatedly, ignoring phone calls and letters and sending mixed messages. We believe they change their tunes when they get a call from our Long Beach loan modification attorneys because they know we have the knowledge and negotiating skills to protect our clients' rights. In fact, we absolutely will file a lawsuit to stop an imminent foreclosure or protect our clients from the negative effects of predatory lending.

If you've been struggling with your bank for weeks or months to get a loan modification, you should call Howard Law for help. To set up a free, confidential evaluation of your case, please contact us through our Web site or call toll-free at 1-800-872-5925.