Lenders graded on response to troubled homeowners
Mass. nonprofit issues report card for 10 companies
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Grade your mortgage lender? That's what a local nonprofit association did to find out how lenders are doing at modifying loans of delinquent homeowners.
The Massachusetts Association of Community Development Corporations developed a report card on 10 lenders or mortgage loan servicers, and the overall grades were underwhelming.
The top performers were
The grades measure how many delinquent loans were modified, how many of those resulted in improving borrowers' circumstances, and how quickly the companies responded to requests for help.
The lowest grade, a D, went to Saxon Mortgage Services, which modified 15 percent of loans, while 26 percent of homeowners had positive outcomes.
Joe Kriesberg, president of the association, said the report card is a way to hold lenders and loan servicers accountable for their efforts to help troubled borrowers, especially now that so many companies have announced major foreclosure prevention services.
"The foreclosure crisis is having a devastating impact on individual families, whole neighborhoods, and indeed the national and worldwide economy," he said. "We cannot rely on purely voluntary actions by the industry. Mediocre performance is simply not acceptable - especially from companies with resources to do better."
His group plans to release the report today at a forum at the Westin Hotel in South Boston.
The report was based on a survey of 19 nonprofit organizations in Massachusetts that advised 1,100 homeowners facing foreclosure this year. Counselors reported lenders modified mortgage terms in 24 percent of cases, and 43 percent of borrowers had successful outcomes; that is, their monthly payments were reduced or they were able to refinance into a lower-cost loan or were able to sell their house and have the debt wiped out.
Officials from Bank of America and JP Morgan Chase said they were committed to helping people stay in their homes. Both companies recently announced large-scale programs for quickly modifying the loans of hundreds of thousands of homeowners.
Saxon spokeswoman Jennifer Sala defended the company's performance. She said that in 2008, the Texas-based servicer helped more than 40 percent of troubled borrowers in Massachusetts remain in their homes.
The report comes as government officials and housing advocates nationwide discuss how best to solve the foreclosure crisis.
The Federal Deposit Insurance Corp. yesterday released details of its proposal for a nationwide loan modification program. The agency proposes spending $24.4 billion to help about 2.2 million people, by paying servicers $1,000 for each modified loan and having the government absorb up to 50 percent of losses if a borrower re-defaults on the loan.
Also today, the state is sponsoring a foreclosure prevention workshop in Marlborough.
Jenifer B. McKim can be reached at jmckim@globe.com.
