Ocwen begins loan modifications under Treasury plan
Ocwen Financial Corp., a servicer of subprime mortgages, is among the first mortgage servicers to begin modifying loans under the U.S. Department of the Treasury’s Home Affordable Modification Program.
The program, unveiled last month, allows at-risk borrowers to reduce their monthly mortgage payments in an effort to keep them from losing their homes. It creates a $75 billion loan modification program that would allow “responsible homeowners” to refinance to interest rates as low as 2 percent.
“We were well positioned for a vigorous launch of this new government program. Since the outset of the mortgage crisis, we have increased key staffing by over 65 percent,” Ocwen Chairman William C. Erbey said in a news release. “Our modification processes required very little tweaking to comply with program guidelines.”
For a loan modification, lenders would have to reduce the mortgage payments to no more than 38 percent of the borrower’s income. The Treasury Department would share the cost for lenders to cut that debt-to-income ratio to 31 percent.
Loans could be extended to up to 40 years.
Read more from the Bizjournals
