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Video Blog 2009 November Progress of Loan Modification Affordability Program
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Progress of Loan Modification Affordability Program

Posted By demetriagraves || 18-Nov-2009

After starting slowly, the Obama administration's mortgage relief program is now ramping up according to a recent government report. Currently 20% of eligible homeowners are getting relief but it's still unclear how many of these may still lose their home.

In this effort known as "Making Home Affordable", lenders are paid to lower a borrower's mortgage payments. This program has struggled since being launched in March with lenders applying it sporadically throughout the industry.

As of the end of October, more than 650,000 borrowers, or 20% of those eligible, have signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels.

In California, about 130,000 homeowners have been enrolled in this loan modification program, which the President announced in February. This is about 19% the state's homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.

Government officials say they are pressing mortgage companies hard to improve their performance. Still, many housing advocates have been disappointed with the $50 billion plan's progress and say that getting a loan modification remains a battle. Many economists doubt the Obama administration will reach its broad goal of helping 3 million to 4 million borrowers within three years.

Most of the borrowers enrolled so far have been signed up for preliminary trial modifications for up to five months. To make the change permanent, they must complete a mountain of paperwork and show they can make their payments on time. The Treasury Department is meant to release data on the conversion rate into permanent modifications in the next few weeks.

Many mortgage services were low-cost operations, with staff in collections departments working to collect on payments from lax borrowers. Those and thousands of new staff, are now pursuing a different work activity - figuring out which of the thousands of borrowers may qualify for help.

Banks and other lenders, for the most part, have been slow to adapt to an unfamiliar climate of falling home prices and rising unemployment.

Categories: Loan Modification

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