Not enough loan mods in Chicago area, report says

By Mary Ellen Podmolik
Posted Nov. 16, 2010 at 8:53 a.m.

Mortgage loan servicers in the Chicago area are not agreeing to enough loan modifications and aren’t committing adequate resources to help troubled homeowners save their homes, concludes a new report issued Tuesday by a Chicago-based housing advocacy group.

Housing Action Illinois found that of 516 loan modification applications submitted between December 2009 and September, 44 percent were approved, 16 percent were denied and 40 percent of the applications were still pending at the end of September. Most of the approvals involved trial payment plans, not permanent loan modifications, the study found.

“We’d heard so much from individual agencies about their frustration with servicers,” said Katie Gottschall Donohue, the group’s director of technical assistance. “It was hard for counseling agencies to make their case individually so we wanted to say look, this is reflective of the Chicago region.”

Loans studied for the report were from 10 different servicers and were drawn from the workload of local housing counselors during the study period and not meant to be a scientific sample, the group said. Four servicers – Bank of America, JP Morgan Chase, Wells Fargo and CitiFinancial – accounted for 80 percent of the cases.

Housing Action Illinois’ report callled on servicers to improve their communication with homeowners and counselors and also called on the federal government to better respond to complaints about servicers and change its Home Affordable Modification Program so loan servicers are held more accountable.

“HAMP has at least made servicers think more modification,” Gottschall Donohue said. “Whether or not they’re doing it the way they’re supposed to, that’s another question. We think principal reduction has to be mandated and we think there needs to be fines from Treasury and something that’s enough that it will have an impact on (servicers’) decision-making. If changes are made to HAMP, it can be a successful program.”

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One comment:

  1. DTOM Nov. 16, 2010 at 10:04 a.m.

    Maybe the majority shouldn’t own a home!