The Home Affordable Modification Program (“HAMP”) was President Obama’s plan for attempting to lower mortgage payments for distressed borrowers in order to prevent foreclosures. The HAMP program gives homeowners trial modifications to prove they can make the reduced payments before the change becomes permanent. In 2009 the Obama administration fell well short of the stated objective to avert three million foreclosures by implementing HAMP.
Why did the plan not work?
The leading cause for HAMP failure was Bank of America’s role in following through with HAMP modifications. Bank of America purchased Countrywide which led to them incurring 1.4 million delinquent borrowers and cost near $43 billion. To help in aiding Bank of America get through this process they hired a company called Urban Lending to service these troubled mortgages especially the complaints. Urban Lending and similar type companies were relied upon to handle this type of work and were given extremely strict quotas.
Yet now, Bank of America and Urban Lending are both accused of using very shady tactics in the processing of these HAMP modifications. It has been told by previous Urban Lending employees that Bank of America often used extreme stall tactics. They would constantly ask for the same documentation over and over, although they had already received it. What this would do is stall the HAMP modification long enough that they could close the file and deny the modification due to a lack of paperwork. They also used incorrect income calculations while filling out customer forms, which often times resulted in additionally fees because of the delays.
Urban Lending employees alleged many dirty tactics including spotting which signatures were computer generated and which were genuine so that the complaints with genuine signatures would be treated with more importance. They also alleged that borrowers’ modifications were delayed for over a year sometimes to collect fees and interest, along with disqualifying people for HAMP modifications because their debt-to-income ratio got worse over time. Urban Lending was also forging documents and falsifying conversations in order to meet extremely strict quotas. This deceit would often lead to the denial of HAMP modifications.
Bank of America is believed to have outsourced this type of work to other contractors as well who may be partaking in the same practices. Homeowners should be aware that these are major concerns when going through the HAMP modification process, which could eventually lead to foreclosure.