October 14, 2009 (FinancialWire) — Almost half of the trial mortgage modifications converted to permanent modifications for distressed homeowners under the Treasury Department’s Home Affordable Modification Program are attributable to Ocwen Loan Servicing, LLC, the principal subsidiary of Ocwen Financial Corp. (NYSE: OCN). There are 27 large banks and loan servicers participating in HAMP, but Ocwen alone completed 44.6% of all of the permanent modifications done by the industry.

According to a report released last week by the Congressional Oversight Panel monitoring the government’s Troubled Asset Relief Program, only 1.26% of trial modifications under HAMP were able to convert to permanent status as of September 1, 2009. Ocwen, however, converted 13.9% of its customers’ trial modifications during that timeframe, and its conversion rate is now over 20% and climbing.

Servicers collect HAMP incentive fees only for modifications that convert to permanent status. To convert, the servicer must obtain and verify all documentation required of the homeowner under HAMP guidelines and receive three monthly payments on the modified loan during the trial period. The converted modifications can also generate second- and third-year bonus fees for servicers, assuming the loans continue to perform.

Ocwen was one of the first servicers to begin executing modifications under HAMP and has pledged to work with the Obama Administration to implement and improve its foreclosure prevention efforts. “Sustainable modifications are the key to a lasting solution to the daunting foreclosure crisis which threatens so many families. We applaud and support the Administration’s efforts to assist homeowners with unaffordable mortgages,” said Ocwen chairman and CEO William C. Erbey.

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