Last week, we invited readers to share their experiences with Obama's Making Home Affordable program, and asked you, "Is it working?"
By the numbers, the answer is "slowly." Three weeks ago, at the beginning of June, the New York Times reported that 100,000 loan modifications had been offered to struggling homeowners. This week, a Treasury Department spokesperson told the Huffington Post that participating mortgage servicers have extended 200,000 offers for trial loan modifications. How many of those have actually been approved? The Treasury is collecting data from servicers and plans to release official stats next week, but the AP reports that in excess of 50,000 loan modifications are already underway.
But the real measure of the program's success is not so easily quantifiable. We received dozens of stories of homeowners who tried for months to get approved for a Home Affordable loan -- and those who eventually navigated the bureaucratic red tape find that getting a modification doesn't necessarily mean everything's peachy.
Jeff from Salt Lake City, UT, is one of the 50,000 enrolled in the program with a trial loan modification, and it means that his family has a chance of staying in their home -- although they're waiting to see if it works for them in the long run before they celebrate. "I can't say if the Making Home Affordable plan is 'working' per se, but it isn't a total failure so far," he wrote.
Jeff and his wife Chiara bought a house in Salt Lake City in the fall of 2007. "We moved from Los Angeles to Salt Lake City partly because we could afford a home in Salt Lake where we were doomed to be perpetual renters it seemed in LA," Jeff said.
We put twenty percent down on the purchase of the home and were comfortably making the mortgage payments until December of 2008, when the company with which I was employed told me that it would no longer be able to pay me anything. I was able to start being paid at a small law firm not long after that, but I now only make about fifty percent of what I previously made at my old job. This drastic reduction in income and the simultaneous increase in many of our living expenses (utilities, fuel, health insurance, etc...) meant that, where we had been spending something like a third of our gross income on the mortgage before, now we were paying well over 70% of our gross income just to keep the house payments current.
Long story short, we were eating into our somewhat meager savings every month and could see the dark at the end of the tunnel. Plus, the market the way it was and is, we did not see much likelihood of selling our home faster than we would run out of money (not to mention the fact that our home, while not underwater, has lost significant value over the past year). We were pretty much resigned to either foreclosure or miracle when we heard the President announcing his Making Home Affordable plans on TV in March. When we looked into it further on the government website set up to explain the program, it seemed we were tailor-made for the Home Affordable Mortgage Program.
Jeff's struggle to negotiate with his lender echoes others that the Huffington Post has covered: delays and inefficiency. "Sometimes I called every day of the week to see if anything was developing - if there were any other documents they needed from me, anything. Some people who answered the phones were helpful and seemed to know what they were talking about, some were quite rude and seemed to have no idea what was going on. Sometimes I would get conflicting information in two phone calls on the same afternoon."
After months of back-and-forth with the lender, Jeff received some bad news:
Eventually, one day when I called up, I was told that we had been denied. No explanation. I was crestfallen, to say the least. I didn't even know how to break it to my wife. The Obama plan had been -- and I know how hackneyed it is to say it -- the first thing we felt hopeful about in half a year with regards to our home and our finances. I was assured by the lender that they had other programs in place that could be helpful to us, but I suspected that these would be far less favorable to the borrower than that of the Obama administration. I half wondered if we were being denied on no grounds whatsoever simply to shunt us into the loss prevention programs the bank already knew and loved.
Jeff's story was featured on NPR's Planet Money podcast, and when he called his lender a few days later, he was told that they had been approved for a trial period:
The Trial Period ends in September, at which time our lender will determine whether or not to make the modification permanent. We have been told that this is a more or less 'rubber stamp' decision wherein the modification will become permanent so long as our situation (e.g., employment and regular payments) has not changed.
I certainly hope so.
Even though our modification did not reduce our monthly mortgage payment to 31% of our gross monthly income (leastways, not after escrow and taxes and the like), it has offered us the chance to be able to stay in our home. It hasn't saved us outright -- we still can't buy things or go out for dinner or travel or anything -- but we don't think we are in immediate danger of default and foreclosure any longer. Hopefully it will be enough to get us back on our feet when, someday, I can make a bit more money.
I just wanted you guys to know that, theoretically, the program is helping at least one couple out there in America. The help is less than we hoped for and we had to tilt with windmill after windmill to even get this far, but it may yet work out for us.
When that seems more sure, I have sworn to frame a photo of President Obama for our dining room -- like Catholics did of Kennedy in the 1960s.
Hell, if, five years from now we still have our home and can even enjoy a bit of safety and the occasional night out, I may just build the guy a statue.
Thanks, and wish everyone else you've heard from good luck. I know how badly we all need it.
Who is being helped by the the Making Home Affordable program? If you or a neighbor has applied for or received a Home Affordable loan modification, we're eager to hear from you. Send us your stories at email@example.com. And sign up here to receive further updates about our foreclosure project.
Find out more about Dispatches from the Displaced, HuffPost's Eyes&Ears series of reader-submitted foreclosure stories.
Correction: June 25, 2009
The photo accompanying this story was changed after readers pointed out that the original image was unsuitable. The original photo mistakenly accompanying the article depicted houses in New Orleans, LA after Hurricane Katrina.