The Treasury Department could move faster in modifying second liens, a mortgage securities analyst says, by requiring servicers to conduct their own internal matching of first and second liens.
Using their internal systems, Home Affordable Modification Program (HAMP) servicers could "capture approximately half of the second liens backing modified first liens," according to an Amherst Securities Group report.
However, Treasury has contracted with Lender Processing Services to build and maintain a database of second liens that may be eligible for the HAMP second lien modification program (2MP). Servicers are required to use LPS to identify eligible matches.
The LPS matching project is "far more cumbersome than it needs to be," said ASG senior managing director Laurie Goodman. "This unnecessarily delays the implementation of the 2MP program to the benefit of the second lien investors which are the largest banks," Goodman said.