Few Homeowners Getting Help

by Dollars and Sense

Only a tiny fraction of homeowners at risk for default on their mortgages have sought or received help as a result of the government's recent plan. Most of the modifications that have resulted have been adjustments to payments and interest rates, rather than to principle.

From the Washington Post:

Less than 10 percent of delinquent borrowers eligible for the Obama administration's $75 billion foreclosure prevention program have received help so far, according to Treasury Department estimates released Tuesday morning, showing that the effort has been carried out unevenly throughout the industry.

Of the 2.7 million borrowers who have missed at least two mortgage payments, only 235,247 have received loan modifications so far. Most of those modifications have been completed by just a few banks, while other lenders have finished relatively few.

"We're encouraged by the way the program is ramping up," said Michael Barr, assistant secretary for financial institutions, said in a conference call this morning. "We're disappointed in the performance of some of the servicers, we think they could have ramped up faster . . . and we expect them to do more."

Under the program, for example, J.P.Morgan Chase has modified 20 percent, or 79,304, of its borrowers who has missed at least two payments. Saxon Mortgage Services, which is owned by Morgan Stanley, has modified 25 percent of eligible delinquent borrowers.

But other large banks are lagging. Bank of America has modified 4 percent or 27,985 of its delinquent borrowers. Wells Fargo has modified 6 percent or 20,219. Wachovia has modified 2 percent of its borrowers who are 60 or more days delinquent.

This is the first progress report issued by the administration for its Making Home Affordable program. Under the initiative, the government is offering subsidies to help lenders offset the cost of lowering mortgage payments for distressed borrowers.

Administration officials have been pressing lenders to speed up progress on the program, setting a goal last week of more than doubling the number of borrowers who have received help to 500,000 by Nov. 1. Despite a frustrating start, administration officials have said they are still on track to help up to 4 million borrowers within the next three years.

Labels: foreclosures, Mortgage plan, underwater mortgages

 

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8/04/2009 12:23:00 PM