By Alan White
Consumer advocates, state and federal regulators and politicians are calling on subprime mortgage servicers to modify loan terms to stem the rising tide of home foreclosures. Lenders are promising hotlines but what happens when homeowners call servicers? Are the servicers modifying loan terms? Unfortunately servicers are not making this information public, at least in an accessible way. Monthly reports to investors, however, do include some data on loan modifications. I decided to try tabulating numbers from some of the November monthly remittance reports to see what the servicers are doing. These reports cover only the loans in a particular pool, usually two to ten thousand mortgages from a single month or quarter. It seemed logical to start with groups of mortgages originated in the last two years, since most subprime mortgages (60% to 80%) are 2/28 ARM’s, with big payment increases after two years. I gathered the November remittance reports for five leading servicers to see what they were doing. The results are discouraging.