Chase Bank recently announced that from January through July 2010, it has assisted approximately 900,000 interested homeowners in modifying their home loan. What’s interesting about this announcement is that Chase is actually doing something to address the top three complaints that have affected both HAMP (the Federal Home Affordable Mortgage Program) and the entire banking and loan modification industry. Here are the top three pitfalls and what Chase is doing about them.
Problem one. The loan modification process confuses most homeowners. Most homeowners in the United States originally purchased their home through a real estate or mortgage broker who took them by the hand throughout the buying process and guided them. To help a homeowner get up to speed on a loan modification, Chase now assigns an advisor to each client who works with Chase; This counselor guides the client through the modification process and is their primary contact with Chase from start to finish.
Problem two. Banks often lose documentation and ask owners to resend it. Most homeowners who have had financial difficulties find it difficult to submit the necessary documentation to a lender and hold a job at the same time. What makes matters worse is that some owners learn that after sneaking out during lunch to fax a Kinko’s finances, previously submitted documents were lost, incorrect, or never received by the financial institution. The other day, for example, a person at a bank notified me that an application had been rejected because a zip code was missing from the address. He told me that resubmitting the correct document should be an easy task, not knowing how precarious today’s job market is and how difficult some companies make it for their employees to perform personal tasks while at work. To make things easier for homeowners, Chase has established a centralized location for document collection and imaging, making it easier to review a client’s file and reducing the need for borrowers to resubmit documents.
Problem three. Loan modifications take too long. Most homeowners have been promised that their modification will be approved after making three monthly trial payments, only to find that after making seven or eight trial payments, they are no closer to getting approved than when they started. To help speed things up, Chase has hired 8,000 new credit counselors to help complete the loan modification evaluation within 30 days of receiving the complete application package from the borrower.
By expanding its team to help clients, Chase can now screen its applicants more effectively. They are better able to communicate with and assist those lucky enough to qualify and discover homeowners who are not eligible for a modification but might want to pursue a short sale or other foreclosure prevention option. Still, the statistics on approval of loan modifications from Chase are not encouraging. From January to July 2010, only 27% of modification applicants offered for the Chase HAMP program were approved, and 38% of applicants through Chase Bank’s own loan modification program were approved. But at least it’s a start in the right direction!
