NEW YORK (TheStreet) -- If there's anything positive to highlight about the government's response to the mortgage crisis, it's that the Obama administration's "Making Home Affordable" program has kickstarted the private industry into modifying more loans through proprietary programs.
The most recent data released by the Treasury Department on Friday show that the federal program's progress slowed further in July, and that people are canceling federal workouts at a remarkable pace. The vast majority of homeowners who abandon the federal program but stay in their home do so through an alternative offered by a bank.
About 630,000 people have canceled workouts offered by the Home Affordable Modification Program (HAMP), slightly less than the 678,000 who are still in active trials or permanent modifications. Over 45% of those who canceled a trial mod moved into an alternative modification offered by a bank, while 31% of those who weren't eligible for the program did the same.
The statistics can be misleading about the industry's progress in modifying loans, however. The country's four largest mortgage-servicers, Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM) and Citigroup (C), represent 63% of the 1.5 million HAMP-eligible borrowers. They have moved an average of 28% of those homeowners into permanent modifications.
But, for instance, while Bank of America has only moved 76,300 borrowers through HAMP since its initiation, it has modified loans for 100,000 borrowers in 2010 alone using alternative workouts. Since January 2008, it has completed more than 665,000 mortgage modifications.
"When a customer is found to be ineligible for HAMP or falls out of a trial modification, we consider an alternative home retention program, and if no viable solution is available, a dignified exit from homeownership," said Rebecca Mairone, an executive in Bank of America's mortgage division.
Wells Fargo and JPMorgan Chase have reported similar trends.
TheStreet examined the myriad difficulties the country has faced in resolving the mortgages of troubled homeowners - from the government program's problems, to banks' response , to homeowners being targeted by mortgage-fraud schemes - in a special series this week.
In announcing the latest statistics, the government acknowledged that progress has been slow-going and that new problems have arisen since President Obama first announced "Making Home Affordable" in February 2009.
"While there has been some stabilization in the housing market, it remains clear that we have more work ahead," Raphael Bostic, assistant secretary at the Department of Housing and Urban Development, said in a statement. "Through the Obama Administration's efforts over the past 16 months, we have seen increased price stabilization and improved home affordability for prospective, qualified homebuyers. At the same time, we know that we must continue to provide support to underwater borrowers, unemployed homeowners, and to the nation's hardest hit neighborhoods."
http://www.thestreet.com/story/10841376/1/government-mortgage-program-theres-a-bright-side.html?cm_ven=newsweektscpromo
UPDATE on our own efforts with loan modification thru $hiti-Mortgage 8/27/10
After cancelling the plan citi worked up for us because we have an upside-down mortgage where,due to the housing bubble burst we owe much more than our home is worth ....(Owing over $100,000 and house is worth $75,000 AT MOST). Ignoring Obomas January Directive where he advised the banks to "work with" upside down mortgage holders by reducing some of the principal,....$hiti-Mortgage refuses to work with underwater mortgage holders telling them,...it is govt loan modification "as is" or nothing. Then today I read the above article learning that other big banks are taking it upon themselves to help out such mortgage holders with their own "Alternative Modification Programs" or "Alternative Home Retention Programs" - wonderful news, right? Only the right thing for the Bank$ters to do, right? Since they are the ones who illegally artificially inflated the values of their mortgage backed securities when presenting them to investors for sale......soooooooooo
Today I called (866-272-4749) Customer Service at $hitiMortgage and talked to a rep who refused to give me her full name and employee ID # until I put up such a fuss about her refusal that she had to go ask her supervisor if it was ok to give me that info and of course,...the ans was "of course," so the person I spoke to was named Veronica (no last name) and her employee # is VW93176 . I called around 1:15 pm EST)
I told her that we had refused the loan modification plan that $hiti had worked up for us for two reasons;
(1) That the figures didnt include all of the monies allegedly owed, neglecting to include $15,000 in arrears, penalties and fines that (as we understand) will be billed at a later time, seperately, making the total amount of our monthly payments unknown (who would sign onto a contract like that?) and
(2) Because the amount owed on the loan is greater than the homes worth (upside down or underwater mortgage)
I also informed her of the nature of the article above,.....indicating to her that all the other "Big Bank$" were formulating their own programs to help these type mortgage holders,....and then I asked her what sort of program "independant of govt aid" $hiti was offering its homeowner customers in similar circumstance.....ha ha ha the answer was NOT, nothing, Nada from $hiti for homeowers who dont qualify for govt modification or who hold upsidedown mortgages. According to $hiti-Mortgage,...there is no help for these kind (our kind) of struggling homeowners...ignoring Obomas January Directive (to reduce principal) and ignoring the example of other more "customer friendly" big banks who have taken it upon themselves and come up with their own programs to help struggling homeowners to remain in their homes....
$hiti did however, offer to help us with a "short sale" which means, they will help us sell our home at a reduced price on the open market...(the "long arm" provision which prohibits us or any other family member or friend from purchasing it)
I told $hiti that we were not interested in selling the home but in staying in it. I told them that they only way we would be leaving it is upon a contract recission based on their illegalities and only after which they paid us back every red cent we have into the place.....
Veronica didnt know what to say, but I am sure she made note on the record that we would not go gently into the fight....
$hiti-Wars Continues ......
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I am following your progress and have you on my blogroll for my blog (zingervotes.blogspot.com) IT IS AMAZING is it not how this is considered good news?
ReplyDeletethe 673,000 that are in modification that cancelled it represent about 40% of those that are deliquent and in foreclosure. Since about 60% of those in foreclosure are not getting help.
I fail to see how modifying a loan without reducing the principle is of any help to people..... what happens if they then lose their job or have to MOVE (which usually requires selling a home). ???????