Tag Archives: SIGTARP

SIGTARP moves to hold top brass accountable for bad bank behavior


In its quarterly report to Congress, published Wednesday morning, the Special Inspector General of the Troubled Asset Relief Program proposes a new rule that bring an end to the “insulated CEO” by requiring the CEO and other executives to sign an annual certification that conducted due diligence within their organization and can “certify that that there is no criminal conduct or civil fraud” in their company.

“The American people have called for stronger reforms on Wall Street, frustrated by the lack of senior executive accountability at the largest banks,” SIGTARP Christy Goldsmith Romero said in a letter to Congress attached to the quarterly report.

To be sure, Wells Fargo is not headquartered on Wall Street, but rather in San Francisco, but it is believed Goldsmith Romero is using the term broadly to encompass the activities of systemically important financial institutions.

“I have called for Wall Street reform based on the difficulties SIGTARP has faced as a law enforcement agency in proving criminal intent of senior executives at large institutions given how isolated they are from knowledge of fraud in their company,” Goldsmith Romero continued. “This isolation is part of the culture at large institutions, and is something that is unlikely to change absent reform. That is why I am proposing a reform to bring accountability to the ‘Insulated CEO’ and other high-level executives.”

Goldsmith Romero’s proposal would “remove the insulation around Wall Street CEOs and other high-level officials” by requiring the CEO, chief financial and “certain other senior executives” pledge annually that their company is fraud free.

“No longer allowed to stay ‘in the dark,’ a crime and fraud certification forces the CEO to be ‘in the know,’” Goldsmith Romero said. “Crime and fraud cannot be allowed to go unchecked at our largest institutions.”

According to Goldsmith Romero, the proposal is modeled after the annual Sarbanes-Oxley certification, and would “create an incentive for top executives to institute strong antifraud internal controls on lower level executives and managers.”

SIGTARP: Mortgage Servicers Have Wrongfully Terminated Homeowners Out of the HAMP Program

WRONGFUL TERMINATIONS OF HOMEOWNERS FROM HAMP BY TOP HAMP SERVICERS, Q4 2014 TO Q3 2015 Servicer Wrongful Terminations of Homeowners from HAMP Bank of America, N.A. X CitiMortgage Inc X JPMorgan Chase Bank, N.A. X Nationstar Mortgage LLC X Ocwen Loan Servicing, LLC X Select Portfolio Servicing, Inc. Wells Fargo Bank, N.A. X X Wrongful terminations of homeowners from HAMP found by Treasury. Source: Treasury’s servicer compliance examination reports covering Q4 2014 through Q3 2015, as provided to SIGTARP



TARP’s major foreclosure prevention program, the Home Affordable Mortgage
Program (“HAMP”), was created to provide sustainable and affordable mortgage
assistance to homeowners at risk of foreclosure.1 Although this program is at a
turning point in its lifecycle, mortgage servicers administering HAMP will continue
to need strict oversight in upcoming years. While HAMP was already scheduled to
stop accepting homeowner applications on December 31, 2016, Congress recently
terminated HAMP as of that date, but protected homeowners’ ability to stay in
HAMP and receive TARP-funded assistance for up to six years.2
To give homeowners in HAMP the best shot at keeping their homes, the
greatest concern going forward should be helping the homeowners who are in
HAMP to stay in HAMP for the full six years. Already, as of December 31, 2015,
507,359 homeowners with permanent HAMP modifications fell out of the program
by missing three payments (referred to as “redefaulting”) – which is almost one out
of every three homeowners in HAMP.3,i

The harm to a homeowner falling out of HAMP is significant, as they are
no longer eligible to receive TARP incentive and other benefits.ii According to a
Treasury survey of HAMP servicers:4
• 23% of all homeowners who redefaulted out of HAMP moved into foreclosure,
• 12% of redefaulted homeowners lost their homes through a short sale or deedin-
lieu of foreclosure, and
• 28% of redefaulted homeowners received an alternative modification,
usually a private sector modification that is less advantageous than a HAMP

Given the high percentage of homeowners falling out of HAMP and known
problems with servicers not following HAMP rules, in October 2013, SIGTARP
recommended that Treasury research and analyze whether, and to what extent, the
conduct of HAMP mortgage servicers contributed to homeowners redefaulting on
HAMP permanent mortgage modifications.iv Although Treasury has not conducted
a full analysis, Treasury has partially implemented SIGTARP’s recommendation,
and reviews samples of 100 homeowners who had redefaulted out of HAMP at
each of the largest HAMP servicers each quarter as part of Treasury’s on-site and
remote compliance testing at each of the largest servicers.

SIGTARP’s concerns over servicer misconduct contributing to homeowner
redefaults in HAMP have been borne out. Treasury’s findings in its on-site visits to
the largest seven mortgage servicers in HAMP over the most recent four quarters
show disturbing and what should be unacceptable results, as 6 of 7 of the mortgage
servicers had wrongfully terminated homeowners who were in “good standing” out
of HAMP.v

These staggering findings clearly show that servicer misconduct is contributing
to some homeowners falling out of HAMP. Homeowners were wrongly terminated
from HAMP by their servicer despite making timely mortgage payments, putting
them at risk of losing their home. These homeowners were forced out of HAMP
through no fault of their own. Mortgage servicers did not give these homeowners a
fair shot. As these instances were found through sampling, Treasury does not know
how many other homeowners were also wrongfully forced out of HAMP.


Here is SIGTARP report. Click here.

SIGTARP report: More than 7 out of 10 (70%) homeowners were turned down for HAMP from their servicer

SIGTARP report to Congress:


Effective December 1, 2009, Treasury made the decision to require that HAMP servicers report to Treasury’s official HAMP database on every person denied for HAMP and the reason why the servicer denied the homeowner admittance into the program. Under HAMP, a homeowner’s mortgage servicer reviews the homeowner’s application and supporting documents and determines whether the person gets into HAMP or not. Requiring reporting on HAMP application denials is one way that Treasury gathers information to conduct oversight over HAMP servicers. Based on Treasury’s data through April 30, 2015, CitiMortgage, Inc. (“Citi”) has denied 340,439 out of 391,418 (87%) applications it received, roughly 9 out of every 10 homeowners that applied.16 Through 2012, the mortgage servicers that had the highest numbers of HAMP participating homeowners were JPMorgan Chase and Bank of America. Overall, JP Morgan Chase has denied 84% of homeowners who applied for HAMP through April 30, 2015, denying almost a million homeowners (952,413). Only 16% of homeowners who applied through JPMorgan Chase got into HAMP trial modifications. Bank of America denied 80% of homeowners who applied for HAMP, denying 685,364 homeowners. Only 20% of homeowners who applied through Bank of America got into HAMP trial modifications.17 Beginning in 2013, Ocwen became the largest HAMP servicer.18 Ocwen has denied 70% of all homeowners applying for HAMP, denying 748,414 homeowners and approving fewer than one-third of homeowners who applied.19 Figure 3.4 shows the number of homeowners who were denied a HAMP trial modification, and the number who actually started a HAMP trial, by the seven top HAMP servicers Treasury currently reports on in its quarterly MHA Program Performance Report.

TABLE 3.1 HAMP APPLICATION VOLUME, OUTCOMES, AND DENIAL RATES BY STATE, AS OF APRIL 2015 State Applications Received Applications Denied Trials Started Denial Rate Alabama 51,803 38,321 13,482 74% Alaska 3,240 2,391 849 74% Arizona 172,103 117,534 54,569 68% Arkansas 21,911 16,708 5,203 76% California 1,106,642 757,296 349,346 68% Colorado 82,351 59,928 22,423 73% Connecticut 79,125 55,119 24,006 70% Delaware 19,276 13,145 6,131 68% District of Columbia 10,966 7,974 2,992 73% Florida 673,382 471,178 202,204 70% Georgia 219,318 149,963 69,355 68% Hawaii 20,516 14,578 5,938 71% Idaho 22,660 16,539 6,121 73% Illinois 280,507 191,774 88,733 68% Indiana 81,013 60,115 20,898 74% Iowa 22,260 17,005 5,255 76% Kansas 21,237 15,965 5,272 75% Kentucky 33,056 24,675 8,381 75% Louisiana 51,982 38,925 13,057 75% Maine 17,607 12,498 5,109 71% Maryland 165,185 109,465 55,720 66% Massachusetts 115,318 77,152 38,166 67% Michigan 181,705 133,888 47,817 74% Minnesota 75,415 52,379 23,036 69% Mississippi 29,660 21,508 8,152 73% Missouri 74,439 54,180 20,259 73% Montana 7,202 5,261 1,941 73% Nebraska 11,917 8,975 2,942 75% Nevada 109,447 74,532 34,915 68% New Hampshire 23,390 16,302 7,088 70% New Jersey 206,920 144,976 61,944 70% New Mexico 22,890 16,410 6,480 72% New York 304,696 212,895 91,801 70% North Carolina 130,402 92,203 38,199 71% North Dakota 1,634 1,318 316 81% Continued on next page

HAMP APPLICATION VOLUME, OUTCOMES, AND DENIAL RATES BY STATE, AS OF APRIL 2015 (CONTINUED) State Applications Received Applications Denied Trials Started Denial Rate Ohio 154,428 113,160 41,268 73% Oklahoma 26,938 20,736 6,202 77% Oregon 65,359 47,152 18,207 72% Pennsylvania 163,897 118,211 45,686 72% Rhode Island 22,635 14,607 8,028 65% South Carolina 72,480 53,624 18,856 74% South Dakota 3,193 2,480 713 78% Tennessee 79,742 56,736 23,006 71% Texas 273,517 204,074 69,443 75% Utah 43,939 30,062 13,877 68% Vermont 5,936 4,410 1,526 74% Virginia 126,838 88,234 38,604 70% Washington 123,723 88,779 34,944 72% West Virginia 11,064 8,520 2,544 77% Wisconsin 60,533 43,343 17,190 72% Wyoming 3,536 2,668 868 75% Total 5,696,808 (applications received) 4,002,886 (applications denied) 1,693,923  (HAMP trials started) 70% (denial rate)

Note: Totals include applications received from Puerto Rico, Guam, and the Virgin Islands, as well as 27 applications for which Treasury’s data is incomplete.

Sources: Treasury, “HAMP 1MP: Trial Fallout and Denials – Trial Denials by State,” April 2015, accessed 6/5/2015; Treasury HAMP data.


Struggling homeowners who received loan modifications under a federal government program are defaulting on their mortgages at an alarming rate, according to a watchdog report released Wednesday.

The report from the special inspector general for the Troubled Asset Relief Program said the Treasury Department’s Home Affordable Modification Program, or HAMP, has failed to ensure that mortgage reductions are sustainable.

House Republican leaders put an emphasis on overhauling tax code ahead of talks over the debt limit.

Home loans modified in the third and fourth quarters of 2009 are now defaulting at a rate of 46 percent and 39 percent, respectively. As of the end of March, more than 312,000 homeowners have defaulted onmortgages modified under HAMP, according to the report.

“This is a significant problem,” said Christy Romero, special inspector general for TARP. “When homeowners fall out of these modifications, all of a sudden they’re facing huge mortgage payments. If they can’t afford it, they’re going to get foreclosed on.”

The Obama administration created HAMP in 2009 as a lifeline for the millions of homeowners facing default in the wake of the housing bust. The program provided $75 billion to help lenders reduce borrowers’ monthly payments to 31 percent of their income.

At the time, the administration estimated that HAMP would help as many as 4 million homeowners avoid foreclosure. But the program has been plagued with delays and has faced criticism for not reaching enough struggling Americans.

Rest here…