Bloomberg News

BofA, JPMorgan Fail to Make Fannie Mae Grade for Loan Servicing

September 15, 2011

Sept. 15 (Bloomberg) -- Bank of America Corp., the largest U.S. mortgage servicer, failed to make a list of companies doing a satisfactory job of assisting homeowners struggling to pay their mortgage, according to Fannie Mae.

Of the 11 biggest servicers of Fannie Mae mortgages, Wells Fargo & Co., Citigroup Inc., Ally Financial Inc. and EverBank Financial Corp. are on track to receive satisfactory or better grades under a newly created customer service and foreclosure- prevention ratings system, the mortgage-finance company said in a statement. JPMorgan Chase & Co., SunTrust Banks Inc., PHH Corp., PNC Financial Services Group Inc., OneWest Bank FSB and MetLife Inc. were the other companies that didn’t make the list.

“Servicers who achieve the highest ratings are leading the way in providing assistance to homeowners who are having difficulty making their mortgage payments,” Leslie Peeler, vice president of servicer portfolio management for Washington-based Fannie Mae, said in the statement yesterday.

Loan servicers interact with borrowers, collect mortgage payments and oversee foreclosures. More than 228,000 U.S. homeowners received foreclosure filings in August, the highest total since March, RealtyTrac Inc. reported today. Default notices rose 33 percent from July as lenders began to speed up processing of paperwork delayed by probes into documentation practices, the Irvine, California-based data service said.

Loan Modifications

The Obama administration has sought to prevent foreclosures through its Home Affordable Modification Program, which pays banks and servicers to modify monthly payments for delinquent borrowers. About 675,000 homeowners have had permanent loan modifications under the plan through July, compared with the initial goal of as many as 4 million by 2012, according to the Treasury Department. Another 2.42 million homeowners were offered modification plans through proprietary programs from servicers.

Under Fannie Mae’s Servicer Total Achievement and Rewards, or STAR, program, mortgage companies were scored based on the number of distressed homeowners who receive help and the customer’s experience, such as the response time for complaints, in the second quarter. Satisfactory scores range from three stars for “at least median performance” to five stars for “superior performance.”

This is Fannie Mae’s first report on the STAR program, announced in February. Servicers below the median or with unsatisfactory results don’t receive a rating.

Andrew Wilson, a spokesman for Fannie Mae, said the company wouldn’t discuss the servicers who failed to make the list of those on pace for at least three-star ratings. Fannie Mae, which has been in U.S. conservatorship since 2008, is the country’s largest mortgage financier.

Working Toward Improvement

Bank of America, which has given modifications to more than 910,000 borrowers since 2009, has “previously acknowledged that there is room for improvement in key areas, particularly those affecting the customer experience, and we are continually improving our processes to assist distressed homeowners,” Rick Simon, a spokesman for the Charlotte, North-Carolina-based lender, wrote in an e-mail.

“Our team will continue working to prevent foreclosure for our customers who are experiencing hardships as a result of unemployment, underemployment and other continued economic conditions in our country,” said Simon, whose company announced plans on Sept. 12 to slash 30,000 jobs.

Simon declined to comment specifically on the Fannie Mae report. Thomas Kelly, a spokesman for JPMorgan in New York, also declined to comment, as did David Isaacs, a spokesman for Pasadena, California-based OneWest Bank.

Talks Over Status

PHH declined to comment because it is in talks with Fannie Mae about its status on the list, Jonathan McGrain, a spokesman for the Mount Laurel, New Jersey-based company, wrote in an e- mail.

MetLife is “committed to the highest level of customer service,” David Hammarstrom, a spokesman for the New York-based insurer, said in an e-mail. “In the past 12 months the company has completed over 8,000 workouts, including modifications, repayment plans and forbearance plans.”

MetLife Home Loans received the second-highest ranking for customer satisfaction among mortgage originators from J.D. Power & Associates, a marketing-services company, Hammarstrom said. Moody’s Investors Service this month downgraded its servicer- quality rating of MetLife, citing deterioration in call center customer services, which had “performance levels that are significantly worse than its peers,” according to a Sept. 9 statement.

Fred Solomon, a spokesman for Pittsburgh-based PNC, didn’t immediately return an e-mail seeking comment. Mike McCoy, a spokesman for SunTrust in Atlanta, said the company wasn’t immediately able to comment.

--Editors: Kara Wetzel, Christine Maurus

-0- Sep/15/2011 00:31 GMT

-0- Sep/15/2011 16:57 GMT

-0- Sep/15/2011 17:59 GMT

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net -0- Sep/15/2011 00:16 GMT


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