Huffington Post ran a story last week about Ocwen Financial patting themselves on the back for the amount of delinquent mortgages they've modified using the Making Home Affordable plan. According to the article, Ocwen is responsible for 45 percent of all the successful loan modifications in the country. Wow, 45 percent. If I hadn't almost flunked math, I'd think that was almost half. That's quite an accomplishment.
If you're one of the millions of homeowners trying to get a modification these days you're probably wishing Ocwen was servicing your loan, and if you're an Ocwen customer you're probably feeling pretty hopeful right now. But if you have anything more than a fourth or fifth grade education (around the time they start teaching fractions) this number is far from impressive. Even if it is almost half.
This is where it gets fun, so bear with me: Treasury planned on 1.3 million modifications a year for the next four years. That's a "robust goal" of 25,000 modifications a week, as Richard Neiman calls it in a report from the Congressional Oversight Panel.
The program was introduced at the end of March and so far there has been a total of, hold on to your hats ... 1,711 permanent modifications through the MHA program. Allowing for the three-month required trial period we should have close to 300,000 modified loans since July. Instead we have 1,711. That's 298,289 modifications shy of what Treasury wanted and expected from the banks. The 1,711 actual modifications compared to Treasury's goal amounts to a percentage so low it's not worth mentioning, but I will. It's .57 percent. And Ocwen is taking credit for almost half of that dismal failure.
Time for some more numbers: Ocwen services close to 300,000 loans. Three months ago Treasury reported that 16 percent, or 50,516, of the 300,000 loans Ocwen services were delinquent. Of the 50,516 delinquent loans, Ocwen offered modifications to a whopping 6,502 of those delinquent homeowners and consequentially, approved 2,517 for the three-month trial modification (twelve percent and five percent of the total delinquencies respectively).
I'm sure someone could argue (and Ocwen has) that modifying 770 loans passes for success when compared to the lack of effort made by other banks, but bigger questions need to be asked when it comes to how banks and servicers are modifying loans. Like what happened to the other 95 percent? Why did 1,800 homeowners not get modifications? And why were nearly 4,000 denied the trial period?
If Ocwen offered 6,502 loan modifications, why did only 2,517 move onto the trial? Did homeowners decline the offers because they distrust the terms of the modification and previous unscrupulous actions of the servicer?
Furthermore, one of the only things that could keep a borrower from not completing the trial successfully is missing or being late with a payment during those three months. Ocwen has faced hundreds of charges from the Better Business Bureau and judges in respect to its accounting practices, including waiting to deposit checks. In May a Louisiana judge went so far as to issue an order forcing Ocwen to follow specific accounting practices.
As mentioned in another Huffington Post article, "Ocwen, which is in line to receive up to $553.4 million from the Treasury, faces a federal class-action complaint for harassing homeowners with excessive phone calls, charging illegal fees and adding unnecessary insurance premiums to borrowers' bills. Ocwen engaged in "a nationwide scheme of illegal, unfair, unlawful, and deceptive business practices."
In many cases modifications could actually push payments higher, depending on how the loan is calculated. In the case of Nestor Estrada, "[he] will pay rent to the bank for 30 years and still owe almost the entire balance," said Stephanie Haffner, an attorney at Neighborhood Legal Services of Los Angeles. "He's now trapped in that house."
"I don't think they're motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It's a license to do whatever they want," Margery Golant, a Florida lawyer who worked in the law department of Ocwen Financial told the New York Times.
A Former Ocwen account officer said in court that the company trained its sights on customers who had substantial equity in their homes. In those cases, the company had the most to gain if customers lost their homes in foreclosure, according to an article in McClatchy.
"As for the suits against it, Koches said they represent a fraction of the firm's customer base," the article continues. What fraction? Half or 45 percent?
Of course, we won't know exactly what any of these numbers mean or if they're even accurate until the media and Treasury start auditing and asking questions. Right now, relying on a spreadsheet and Power Point presentation from banks that have notoriously deceived us is a little flimsy.
So while being responsible for 45 percent of the success may seem pretty good in theory, in raw numbers it's not much to brag about. Why not look at Lake National Bank? They've modified 100 percent of their troubled loans. Granted, they only had one delinquent loan, but they modified it. One hundred percent - that's an accomplishment worth mentioning.
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