The Obama administration is walking a fine line. On the one hand, it is trying to encourage servicers to do more loan modifications by giving them a standardized template (Home Affordable Modification Program [HAMP]) and some modest incentives for completing loan mods that actually stick. But on the other hand, it is using the bully pulpit to chastise the industry for not doing enough to prevent foreclosures.
The release of the first monthly Servicer Performance Report last month shed some light on how far the administration is willing to go to use public pressure on servicers by feeding the public impression that the servicing industry is simply not trying hard enough to help. I believe it is called "transparency"--that wonderful new buzzword. With the release of this new report, the administration is putting servicers' loss-mitigation performance squarely in the court of public opinion. But it is giving the public little or no information for interpreting the performance data.
For example, the table the administration published in the new report lumps IBM Southeast Employees' Federal Credit Union--with its 72 seriously delinquent eligible loans--on the same list with Bank of America and its 796,467 seriously delinquent HAMP-eligible loans. And guess which lender has the higher percentage of trial mods started as a share of...