When comparing the loan modification efforts of the top mortgage servicers, it's hard to find rhyme or reason behind their decisions, observers say.
The publicly available data on modifications completed by individual servicers varies from company to company. And people working in the trenches the lawyers and counselors who negotiate on behalf of borrowers give wildly different accounts of servicers' willingness to rewrite loan terms.
Even those servicers that have proven accommodating have also proven fickle, these advocates say.
"It's really hit or miss," said Paul Molinaro, a partner at the law firm of Fransen & Molinaro, in Corona, Calif. "There's often no consistency in what they're doing from one month to the next, or from one loan to the next."
To be fair, servicers' strategies are partly governed by who owns the mortgage, something that may not be apparent to borrowers or their representatives. A bank might be apt to reduce principal for a loan in its own portfolio, for example, while investor guidelines would restrict the same bank from writing down a loan it services for a third party.
But other, less obvious factors are at work like who a borrower's lawyer knows.
"A successful loan mod can depend entirely on the idiosyncrasies of personal relationships and whether somebody has an 'in,' " said Diane Thompson, a lawyer with the National Consumer Law Center in Boston.
Greg Feldman, the operations manager at Feldman Law Center in Mission Viejo, Calif., said whether a borrower gets a loan modification can change "depending on the day of the week."
Feldman said he has found some servicers easier to work with than others. For example, Bank of America Corp., the largest servicer, will not modify any loans for borrowers who are current on their mortgage but are in danger of default. "They want to wait until they see blood," Feldman said.
But Molinaro said B of A "is in some ways the best servicer," largely because he can work on 10 loan files at a time by dealing directly with lawyers at Bryan Cave LLC, the firm that represents B of A in many foreclosure disputes.
"B of A has done so many loans and they have some pretty good programs," he said, adding: "We also have the most lawsuits against Countrywide," formerly the top residential servicer, which B of A bought a year ago.
The Obama administration's Home Affordable Modification Program, under which servicers are given financial incentives to modify loans, promises to bring more standardization.
Beginning in April, participating servicers began sending out "blanket mod" offers to delinquent homeowners. To qualify for a three-month trial, borrowers must send back a signed hardship affidavit, documents verifying their incomes and a first payment. But the HAMP guidelines are mandatory only for loans owned or guaranteed by Fannie Mae and Freddie Mac.
And consumer advocates are already complaining that servicers have not been following the Obama plan's guidelines.
Thompson, at National Consumer Law Center, cited many cases in which B of A and Wells Fargo & Co. had refused to offer modifications under HAMP while JPMorgan Chase & Co. repeatedly asked borrowers to waive their right to a loan mod review.
"Servicers are giving borrowers non-HAMP mods and we don't know if that's what their system is set up for or if non-HAMP mods are more profitable or even if they're getting paid for them," she said. "I have yet to see a single modification that comports with HAMP even though it's easy to check because there are standard forms." (Because of the trial period, the earliest any loans would have been modified under HAMP would be this month.)
Margery Golant, a lawyer in Ft. Lauderdale, Fla., sued Wells Fargo in Circuit Court in Marion County in May for refusing to stop foreclosure proceedings against a borrower who had requested a HAMP loan mod review.
"It has become a knock-down, drag-out battle," she said.
A JPMorgan Chase spokeswoman, Christine Holevas, said it created a "temporary, detailed disclosure form," or waiver, for borrowers it had offered loan modifications before the HAMP guidelines were implemented. The form explained that borrowers had a right to apply for a HAMP mod and outlined "the benefits they would be giving up" by not waiting and proceeding with a regular Chase mod, she said.
B of A spokeswoman Jumana Bauwens said modifications are being completed for loans owned by the Charlotte company, the government-sponsored enterprises and other investors "who have indicated a willingness to modify loans under the Making Home Affordable guidelines."
Mary Coffin, the head of servicing at Wells, said roughly 15% of borrowers do not meet the basic requirements of HAMP because they are in bankruptcy, have a jumbo loan or are investors. Roughly 10% of private-label mortgages that Wells services "are restricted from this type of modification," she said. Borrowers that do not meet the 31% debt-to-income ratio set up by the program will still be offered a loan mod, she said. "It takes time to get these guidelines done and make sure we're responsible in getting them executed. And hopefully, we can just start working through the inventory."
This month American Banker set out to compare the modification approaches of the top four servicers, which handle about 55% of the home loans out there.
B of A said it completed 150,000 modifications through its internal programs during the first half and offered 80,000 through HAMP. Wells was close behind, reporting 148,000 modifications done internally and 52,000 trial mods offered under the Obama program. But neither company said how many HAMP offers were returned with a first payment.
JPMorgan Chase, on the other hand, said it had offered 138,000 trial mods since April, 87,100 of them through HAMP and the rest through an internal program. Of the borrowers who received offers, 53,600 made the first payment and began the trial, including 44,100 through HAMP. But JPMorgan Chase would not say how many modifications it did on its own for the first half.
Citigroup Inc. would say only that it "helped" 180,000 borrowers it would not break out loan modifications versus measures like loan extensions and forbearances.
Further complicating matters, the numbers and definitions of loan mods that the banks have disclosed publicly differ from the data they are required to report to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
Bryan Hubbard, an OCC spokesman, said the data collected for the federal agencies' monthly report "are very conservative," counting only first-lien mortgages, fully executed contacts and one modification per loan. "These are the sort of differences in publicly available reports that make comparisons across reports with different methods difficult," he said.
For the most part, the Big Four servicers have focused their efforts on offering mods to the most seriously delinquent borrowers. Citigroup created a program early this year targeting 500,000 non-delinquent borrowers whose mortgages it holds. None of the other large banks have announced such initiatives, though experts said the banks are likely targeting nondeliquent borrowers on loans held in their own portfolios.
Banks servicing their own loans "very commonly use different teams of employees, different strategies and much greater effort than when they service other people's loans," said Steven Horne, the president and founder of Wingspan Portfolio Advisors, a Carrollton, Tex., servicer specializing in highly delinquent loans.
Industry critics said the lack of apples-to-apples data makes it impossible to determine which servicers are doing better than others. "We don't have enough data or transparency of what's going on inside these large organizations," Thompson said.
Once again, HAMP offers some hope. On Aug. 4, the administration will begin publishing monthly data on loan mods by individual servicers in the program.
