RISMEDIA, January 19, 2010—(MCT)-After a month of intense pressure on banks and other mortgage servicers, the Obama administration recently reported improvement in its much-criticized program to reduce mortgage payments to stave off foreclosures.
The number of temporary loan modifications that had been made permanent had more than doubled to 66,465 as of Dec. 30, 2009, the Treasury Department said.
In addition, another 46,056 three-month trial mortgage modifications were approved and awaiting only the homeowner signatures before they were made permanent as well. As of Nov. 30, 2009, only 31,382 mortgages had been permanently modified. California led the nation with 13,353 permanent modifications as of the end of last month, and 158,935 active trial modifications.
Mortgage servicers have been slow to turn the three-month trial modifications into permanent ones amid complaints from homeowners of lost paperwork and other bureaucratic run-arounds. Although the pace picked up in December after the administration increased its scrutiny and even threatened banks with fines, the number of permanent modifications was still low compared to the trials started.
As of Dec. 30, there were 697,026 active trial modifications. To be eligible, homeowners must be at least two months behind on their payments. But with 2.8 million foreclosures last year, according to RealtyTrac, and filings in December up 14% from the previous month, the administration’s Home Affordable Mortgage Program isn’t doing enough to stem the tide of foreclosures, critics said. The program provides incentives to mortgage servicers to reduce monthly payments for struggling homeowners.
“Serious people inside and outside the administration have thought this through, and we all understand that a more substantial response is needed,” said John Taylor, president of the National Community Reinvestment Coalition. “The question is: Does the political will exist to force the banks to modify loans?”
Administration officials said they realize more needs to be done, but said the program is on pace to meet its target of 3 million to 4 million modifications by 2012.
“We believe there is much more work to be done to make sure the program is running right and stabilize our housing market and the broader economy, but we’re encouraged very much by the efforts we’ve seen to date,” said Michael S. Barr, assistant Treasury secretary for financial institutions.
Overall, 25% of eligible homeowners had trial or permanent modifications, the Treasury Department said. Some large mortgage servicers had extended trial or permanent modifications to at least a third of eligible homeowners as of Dec. 30.
“You have some banks that really did step up to the plate quickly and others whose results were disappointing and need to do much better,” Barr said.
(c) 2010, Tribune Co.
Distributed by McClatchy-Tribune Information Services.
