Loan Modification Fantasy League, How Bad Did Your Bank Do

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As part of the Obama’s administration Making Home Affordable Program (HAMP) name and shame (or praise) initiative, every month a list of banks and mortgage providers is issued. The good banks are praised the bad ones are marked. The idea is to provide an extra incentive for providers to speed up their loan modification procedures.

September’s Loan Modification league showed the winners and losers of the HAMP loan modification league. The league shows the order of the “best” and “worst” banks based on the percentage of loan modifications they carried out, or more accurately, they placed on a trial loan modification, from the total of eligible loans they had to work with.

HAMP Winners Top Ten
1.   Saxon Mortgage Services, Irving, Texas (41%)
2.   Aurora Loan Services, Littleton, Colorado (33%)
3.   Citimortgage, O’Fallon, Missouri (33%)
4.   Nationstar Mortgage, Lewisville, Texas (28%)
5.   JP Morgan Chase, New York, New York (27%)
6.   GMAC Mortgage, Fort Washington, Pennsylvania (26%)
7.   Select Portfolio Servicing, Salt Lake City, Utah (26%)
8.   Wells Fargo Bank, San Francisco, California (20%)
9.   Residential Credit Solutions, Fort Worth, Texas (17%)
10.   Green Tree Servicing, Tempe, Arizona (12%)

What conclusions can we get from this data? It is hard to provide a solid interpretation from such a small selection of banks and mortgage providers but what does seem to jump out of the page is that among the top ten HAMP performers are small banks. In fact it would seem that the number of small banks is disproportionate.
One could reasonably expect that larger banks with a higher volume of loan modifications would be better at putting into play the government’s loan modification process. After all, at least in theory the government is covering the cost (and more) for these modifications. However the opposite seems to be true. Smaller operations seem to have done a better job of redesigning their business to face the increase in loan modification requests.

It is also noteworthy that smaller banks with less loan modifications may have to work less to have a higher success rate. If you have 10 loans to modify you only need to carry out 8 to have an 80 percent rate. However if you have 100,000 to modify… the picture changes. Whatever the case, there does seem to be a lot of room for improvement for the big names in banking that have received so much help from government bailouts.

Those were the winners, what about the losers?
The losers are banks and providers that have not modified any loans at all.

HAMP Losers
1.   American Home Mortgage Servicing, Coppell, Texas
2.   HomeEq Servicing, Sacramento, California
3.   Home Loan Services Inc., Pittsburgh, Pennsylvania
4.   MorEquity, Inc., Evansville, Illinois