9% of Late Home Loans Get Help!
Tuesday, August 4, 2009 at 10:38AM First report by Obama administration details uneven performance by firms implementing $75 billion mortgage modification program.
Nearly 9% of delinquent borrowers have been placed into a trial modification under the Obama foreclosure prevention plan. This translates into 235,247 loans that were at least 60 days delinquent at the 38 loan service firms participating. The adminsitration says it is on pace to hel up to four million homeowners over the next three years!
Officials want to see 500,000 loan modifications under way by November 1st. By releasing the progress reports, the administration is hoping to hold institutions responsible for their performance. The monthly reports aim to show the public which institutions are lagging on progress.
Saxon Mortgage Services, of Morgan Stanley, put 25% of its delinquent loans into trial modifications. GMAC Mortgage put 20% of its delinquent loans into the trial. Bank of America only put in 5% of its delinquent loans.
Participation in the program is voluntary, though once an institution agrees to participate it must offer trial modifications for those who meet criteria.
The modification plan allows eligible borrowers who are at risk of default to lower their monthly payments to no more than 31% of their pretax income. Adjusting the loan must recover more value than foreclosing on the home for a modification to be offered.
The modifications are permanent after the homeowner makes 3 on-time payments.
The housing market is showing early signs of stabilizing. Pending home sales rose 3.6% in June. There are encouraging signs popping up.
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