Wells Fargo, Bank of America and JPMorgan each report greater success outside of the Home Affordable Modification Program than within it. Perhaps unsurprisingly, the most aggressive champion of the program among large, money-center banks has been Citigroup, the only one in which the U.S. government still holds a large ownership stake. Even so, Citi has pushed less than 30% of those eligible through to permanent modifications.
Banks have been making more progress outside of the government-sanctioned box for a few reasons. The federal program wasn't structured to help all troubled borrowers. Banks don't necessarily want to help all of them, either, viewing some financial situations as too precarious. They'd also prefer to tout successes without federal assistance, if they can avoid it.
Through June, fewer than 390,000 eligible borrowers have moved through the Home Affordable Modification Program into permanent modifications and stayed there. Meanwhile, nearly 530,000 of those who received modifications have canceled them. Overwhelmingly, defectors have turned to alternatives offered by banks.
For instance, Bank of America has completed 665,000 mortgage modifications since January 2008 -- just 11% of which have fallen under the Home Affordable Modification Program. In May, Bank of America had difficulty even uploading files to the government's computerized system, leading to apparent inaccuracies in the Treasury Department data.
"When a customer is found to be ineligible for HAMP or falls out of a trial modification, we consider an alternative home retention program, and if no viable solution is available, a dignified exit from homeownership," Rebecca Mairone, an executive in Bank of America's mortgage division, noted when discussing July performance. She added that "HAMP guidelines are quite specific with regard to the debt-to-income ratio, owner-occupancy, trial payment performance and other requirements."
The picture isn't all rosy of course -- it took the industry roughly two years to accept a new philosophy about the mortgage market, in which losses aren't heaped solely upon homeowners. But now they're now reaching out to troubled borrowers across the country with a new pitch: Helping them stay in homes.
The Hope Now alliance has organized workshops across the country to connect homeowners with modification experts. Individual banks have promoted such events as well.