Making Home Affordable: 12 Percent Of Eligible Borrowers Helped So Far

Twelve percent of distressed homeowners eligible for mortgage modifications under the Obama administration's signature effort to reduce foreclosures have been helped so far, the Treasury Department reported on Wednesday. That's an improvement over the previous monthly report on servicer participation in the Making Home Affordable modification program, which revealed that only 9 percent of eligible homeowners had started trial modifications from the start of the program in April through July.

Overall, 360,165 out of 2.9 million eligible distressed homeowners have started trial modifications under the $75 billion Home Affordable Modification Program (HAMP), which gives mortgage servicers an incentive to reduce monthly payments to 31 percent of a borrower's income. Nineteen percent of eligible borrowers were offered trial modifications, up from 15 percent in the previous report.

Servicers that offer modifications get $1,000 upfront and another $1,000 per year so long as the homeowner stays current, and homeowners can get $1,000 a year toward reducing their principal for up to five years.

"At this early date, HAMP has already been more successful than any previous similar program in modifying mortgages for at-risk borrowers to sustainably affordable levels, and helping to avoid preventable foreclosures," said the Treasury Department's Michael Barr in prepared remarks before the House Financial Services Subcommittee on Housing and Community Opportunity.

"Nonetheless, we recognize that challenges remain in implementing and scaling up the program, and are committed to working to overcome those challenges and reach as many borrowers as possible."

Frustrated that lenders had been sluggish to help homeowners and slow the rise in foreclosures, the Obama administration scolded bank CEOs in a July letter.

"We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," wrote Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan.

In early August the Treasury shamed servicers by releasing specific bank-by-bank data on participation in the program. The nation's largest, Bank of America, had done modifications for a mere 4 percent of eligible borrowers. In August, Bank of America improved to 7 percent.

Yet the improvements aren't likely to mollify frustrated homeowners and bank critics.

"Several months into the Home Affordable Modification Program...homeowners and their advocates report that the program is not providing a sufficient number of loan modifications to homeowners, the modifications offered often do not meet the guidelines of the program, and the program itself still presents serious barriers to mass loan modifications," said Alys Cohen, a staff attorney with the National Consumer Law Center in prepared remarks before the housing subcommittee.

"Moreover, even if HAMP operated at its full capacity as envisioned by Treasury officials, HAMP's loan modifications still would be substantially outpaced by foreclosures, and the modifications themselves lack the mandated principal reductions that many believe are necessary to stem the foreclosure tide."

Comments

[Siebenstein]

How about a "letter" (rediculous anyway) that would say;" If you do not modify, we will ask the money back, we have given to you, which belongs to all of us", huh?

Letter, pffffff....

What we need are effin laws.

[APVEGAS]

Good thing the government will get health care right.

[Siebenstein]

Are you sarcastic?

So far nothing good.........

[kassandrasduplex]

...and the other 99% are going to go homeless. Then there is the sad fact that this small portion only involves the "eligible" homeowners, which respresented a watered down number to start with. We are seeing AMericans losing their homes analogous to American farmers losing their farms in the Great Depression.
We need a re-make of the Grapes of Wraith.

[kassandrasduplex]

make that 88% !!

[liberal user]

Bring back the Glass Stegal Act to promote fair competition and eradicate monopolies and too big to fail conglomerates.

Do not allow foreign owned multinationals to own too much American real estate or stock in any individual American manufacturer or corporation.

good articles 4 for slow news day: http://www.iamned.com

[Joseph Joyal]

Countrywide now BofA has note responded to my application, on the phone its the old good luck line.

[WonderingNThinking]

Little boxes made of ticky tacky.

[geeegee]

The day Obama signed the Making Home Affordability program I read the initial 17 page document and found I qualified for the program. To date I have made hundreds of calls to my lender, as the Home Affordable.gov directed me to. I received a barrage of lies, misdirection, lies and stonewalling.
The real agenda of this lack of performance sets up these banks to say..."see the program does not work and thus the banks don't need to be regulated."
I was told by IndyMAC they supported the plan, but they did not know how to implement it.
I was told a variety of lies:
I was steered three times into a conventional refi.
I was told the "don't hold your breath"
I was told, let Bank of America do it.....when only your original lender can do that.
I was told I did not have a Fannie Mae loan when I do.
I sent IndyMAC/OneWest a requested letter of hardship explaining my son went in for surgery and the doctor did the wrong surgery, leaving him with a life or death condition. I work two jobs and I am a single mother and a nurse and need this program to save my family!
In March I had savings and met my bills....now it is 7 months later, my savings are gone and this month I might not be able to meet my mortgage.
Ironic, my refi years ago was done in a week!

[wietog]

I am so sorry to hear your story. Please go to a reputable lawyer who has handled successful modifications in the past.

[strangelet]

This program was always very limited -- it was what the banks would agree to. If it helps ANYBODY, it is at least a partial success.

For those who argue that Obama should have gotten a better deal by threatening the banks, please consider that (a) half of the TARP funds were disbursed before Obama was sworn in; and (b) more significantly, it would really, really not have been a good thing if the US financial system had imploded because of the lack of government or Fed intervention; and (c) as it happens, the vast majority of the relief that banks have received has come from the Federal Reserve, which is not under the control of the President.

I am personally certain that at least 50%, and probably more like 75%, of the applications for relief under HAMP are absolutely unqualified for the program. Why am I so certain? Because there is no downside for a borrower to apply, and hey, it might go through. I've thought about it myself, but I know I wouldn't qualify, so I've chosen not to waste anybody's time. I know several folks who didn't make the same decision. And that's their absolute right.

But it does kind of distort the statistics on approvals.

HAMP will, at best, help a specific fraction of underwater/unemployed homeowners, even if it's success rate reaches 100%. What we need is to add cramdown to bankruptcy.

[wietog]

It appears that the numbers are showing how FEW of the ELIGIBLE applications are being properly and successfully processed.

Do you really think that programs that help people should not exist because of A FEW BAD APPLES?

Seriously. Our country is run by devious corporations, but that seems to be ok with the right-wingers. Very shady stuff goes on in those opulent offices.

Yet those who are suffering and have serious hardship are routinely mocked and denied help because perhaps not everyone is eligible.

Please.

This reminds me of how futile it seems for individuals to recycle while huge corporations pollute the earth with toxic dumping and oil spills.

[GoodScout]

We've been trying to get modification since early June. The bank keeps delaying the process and we're going to be foreclosed on next month. The program is a failure because the banks don't want to do it, and President Obama didn't put enough teeth in the plan to force them to. Cramdown will come too late for my family, but for everyone else get it done!

[Inviernos48]

What I don't understand is why credit unions somehow are not participating in HAMP. My credit union - the Mid Atlantic Federal Credit Union - owns my mortgages and will not yield even though the National Credit Union Administration claims to support this program. The truth is that the Obama administration has not been nearly tough enough either with banks or credit unions. I actually wrote a letter to Geithner and the jerk never wrote back. I have gotten no help from my Democratic congressman (Van Hollen) or from Senator Mikulski. Why was the Obama administration in such a hurry to rescue Wall Street and the rest of us who are struggling to pay and actually do pay our mortgages get screwed? I have burned half my 401K money to stay up to date with my mortgages and the credit union thanked me by denouncing me to the credit reporting agencies for being about a week late. This program's failure is something Obama had better do something about.

[dcrinaz]

Folks, let's stop putting our head in the sand: we need bankruptcy reform with cramdown. We should not give up on this. Demand it of President Obama and of the Senate. The House will pass it. It needs to be reintroduced and a strong, consumer-friendly bill passed. It is the only thing that will stop the foreclosures and make the mortgage lenders modify loans.

LET'S GET BANKRUPTCY REFORM WITH CRAMDOWN BACK ON THE TABLE NOW!

[Zeroes]

I tried to pay my mortage 5 times last month...with BofA...my english as a second language banker put a stop payment on my checking account without telling me...it was an accident...I spent 2 weeks chasing her mistake with the 15 checks I wrote...BofA hit me with late charges even though I have a letter from my bank stating it was not my fault...I can only imagine what people are going through who can not afford their mortgage...

[dcrinaz]

BofA is the epitome of evil.

[geeegee]

b of a evil incarnate
souless house of greed

[Zeroes]

FHA is getting ready to destroy FHA financing for condo's on Oct 1, 2009. They don't have a clue what they are doing.

[KoolAidDrinkersAnonymous]

Wow, this is the left's version of doing a good thing?

12% of borrowers are getting help, yet 88% are not?

With success like this, how can Obama go wrong?

Priceless puff story here folks. If this was a republican program that 88% of people failed to get approved for, the left would be marching in the streets in protest.

Laughing, laughing, laughing.

[Ken Maddox]

The republican programs that were in place during the reign of Bush II are why so many need help now. I would not try to blame this on the present administration, after the abysmal failures of the republican controlled congress from 2001 through 2005.

Laugh again if you feel like it. The democrats will get this mess fixed, but it may take a little more than 8 months. What plans have the republicans introduced that would do more to recover from this situation. What? I'm sorry did you say something about tax cuts?
Now I'm laughing, laughing, laughing!

[Todd12345]

after both of us were laid off, we found new jobs rather quickly although at lower wages . We tried for several months trying to modify our 6.% fixed mortgage . We did not intend or want a free ride - we simply wanted to work thru this and continue a mutually benificial arrangement.

Country wides only solution was a "workout program" . Basically they would give us 6 months lowering our 1700.00 mortgage to 1200.00 per mounth . Then on the seventh month we would begin paying them back at 2200.00 per month plus whatever 6 mounths of late charges would be .

RIDICULOUS

[Zeroes]

You're dealing with white collar criminals at Countrywide...try and find a local bank to get you a 5% refi.

[pebblewriter]

Were the banks and mortgage brokers who encouraged liar loans - even for w-2'd employees - also liberals? What about the ones who pushed option arms? Or the ones who buried interest rate escalations deep in legal documents so convoluted as to require a JD? If you think it's only liars and losers who created this mess, think again. And if you think they're the ones who'll ultimately pay, try getting your house appraised. Whether or not you think they deserve to bailed out, your own self-interest should be enough reason to support a more stable property market. And that's pretty tough to achieve when banks are foreclosing as fast as they can. There is currently NO incentive for them to work with homeowners. A $1,000 incentive per loan? Get real. They make more money off foreclosing http://www.nytimes.com/2009/07/30/business/30services.htmll) The only foreseeable solutions are an alternative funding mechanism, such as FDR's HOLC ( http://www.nytimes.com/2008/02/24/business/24view.html?pagewanted=print ) and/or Barney Frank's cramdown legislation that will grant bankruptcy judges the power to bring banks to the bargaining table. How many more families and neighborhoods must be sacrificed before Washington takes real action?

[strangelet]

Well, the banks' incentive is actually $1,000 per year, not per loan. The REAL incentive, of course, comes if the modification allows the borrower(s) to continue to pay. Banks really do not do that well on foreclosures, except for high end houses. The most important stat about this program won't be clear for a while -- what percentage of folks who get their loans modified are able to maintain the modified payments going forward?

[pebblewriter]

If a bank owns the loan, they do indeed have an incentive to modify loans - provided the present value of future income from the modified loan exceeds the net proceeds of a foreclosed loan. Those banks that merely service an investor's loan may or may not have an incentive to work with the borrower - depending upon the agreement they have with the investor. In the end, I'm not sure it matters much since the banks are making little effort to work with troubled borrowers. The NY Times article points out that many of these servicers make higher profits by charging large fees for working with loans in default/foreclosure. The 12% "success" rate would seem to support this notion. Anyone who wonders whether the banks are working very hard to negotiate modifications should spend a few minutes on the loansafe.org website. Read the stories of frustration from thousands of homeowners who have tried for months to work with their banks, only to be rebuffed at every turn. The banks' assertions that they're trying as hard as they can is a bald-faced lie.