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Homeowners who obtain a mortgage loan modification from Wells Fargo are far more likely to get a private loan modification on the lender’s own terms than one under the rules of the HAMP loan modification program.

Of all active loan modifications in the Wells Fargo portfolio, 85 percent are proprietary loan modifications performed under the bank’s own loan modification programs, the bank recently reported, compared to 15 percent done under the federal Home Affordable Modification Program (HAMP). Of 673,000 active loan modifications performed by Wells Fargo since the beginning of 2009, 574,000 were done through Wells Fargo’s own programs, and 99,000 were done through HAMP.   That’s somewhat higher than the industry average, where 76 percent permanent loan modifications granted since April 1, 2009 have been proprietary modifications, vs. 24 percent HAMP, according to the government’s May Housing Scorecard.   Wells Fargo is one of three major lenders the government cited last week for shortcomings in its administration of the HAMP program, including deficiencies in evaluating borrower’s eligibility for the program. The Treasury Department said it would withhold incentive payments from Wells Fargo, Bank of America and JP Morgan Chase until improvements were made.   Wells Fargo disputed both the assessment and the government’s decision to withhold the payments.   Mortgages modified under HAMP have to follow certain guidelines, such as reducing a borrower’s monthly mortgage payment and total debt-to-income levels, that proprietary loan modifications do not have to follow. According to figures from the HOPE NOW alliance, just over 80 percent of private loan modifications currently reduce a borrower’s payments.   It should be noted that proprietary modifications also have looser eligibility criteria than HAMP.   Wells Fargo spokesperson Teri Schrettenbrunner noted that the bank’s delinquency and foreclosure levels are running well below industry averages, a fact she attributed in part to the bank’s loan modification efforts, which she termed “aggressive.”   She cited recent figures from industry publication Inside Mortgage Finance that showed only 7.22 percent of primary mortgages and home equity loans serviced by Wells Fargo were past due or in foreclosure, compared to an industry average of 10.27 percent.

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