Four more institutions joined the list of servicers set to receive Troubled Asset Relief Program (TARP) funds through the U.S. Treasury Department.
Bank of America, Countrywide Home Loans Servicing, Home Loan Services and Wilshire Credit became the eighth, ninth, tenth and eleventh firm to be pre-approved for TARP funds, under the Making Home Affordable loan modification system.
Simi Valley, Calif.-based Bank of America, will be allowed to draw up to $798.9m of government funds. Countrywide Home Loans has been promised a maximum of $1.86bn. Home Loan Services and Wilshire Credit can draw up to $319m and $366m, respectively.
The other seven servicers on tap to receive funds include Chase Home Finance (which was allotted the largest share thus far — up to $3.55bn), Wells Fargo Bank ($2.87bn), CitiMortgage ($2.07bn), GMAC Mortgage ($633m), Saxon Mortgage Services ($407m), Select Portfolio Servicing ($376m) and Ocwen Financial ($659m).
It’s unclear at this time how much of those allotted funds the institutions have actually received. The rate at which they’re stepping up to the deposit window — if at all — is unknown.
The Treasury bases investment figures on the size of each company’s servicing portfolios, however the government lender may adjust the actual dollar amount based on servicer usage. So far, program funds allocate a total of $13.92bn to the 11 servicers, just a fraction of the Treasury’s $75bn program to prevent foreclosures and help borrowers refinance into new loans.
The government plans to pay servicers a $1,000 one-time fee for modifying a mortgage down to a 38% payment-to-income ratio for five years. Modified loans must survive a 90-day trial in order to be eligible for the incentive payment. Government funds will also match the cost of further interest-rate reductions or other modifications to bring payments down to 31% of a borrower’s income. If borrowers perform in their newly-modified mortgages, servicers would be eligible to receive $1,000 per annum for three years under the government incentive program.
A Treasury spokesperson told HW that servicers are being added to the program on a rolling basis — suggesting this list is just the beginning, and other servicers are likely in the pipeline.