Lenders Resist Making Home Affordable

The Treasury Department announced a total of 31,382 homeowners have received a permanent home loan modification since details of the program were announced in March.  4% of homeowners whose home loans were re-worked through the Making Home Affordable Program  have successfully completed the trial period to receive permanent modifications.  There are currently more than 728,000 trial modifications taking place.

Trial modifications last for 3 months before becoming eligible for permanent modification status.  During the trial period, homeowners are required to remain current with their payments and submit documentation showing proof of income as well as providing evidence of current occupancy.

The numbers that reveal the true story are those that represent the defaults and denials in the Making Home Affordable Program.  25% of borrowers in trial modifications are now in default.  Wells Fargo announced they have 99,674 modifications underway, including trial modifications. Of those that have completed the trial period, 40% are either ready to convert to permanent loan status or have already converted.  Wells Fargo says that 45% have not provided all of the required documentation.  The remaining 12% of borrowers who have made 3 trial payments were declared ineligible for the permanent modification after a review of the submitted documentation.

The Treasury Department has criticized banks for not doing more to make trial modifications permanent.  Servicers have repeated the same complaint since the beginning, saying borrowers frequently fail to provide the required documentation of income and other necessary paperwork.  For anyone who has endured the process of applying for a loan through their bank, this is a tired excuse.  Banks often require documentation in triplicate, most often forcing borrowers to give information multiple times regardless as to whether it has changed.  This is a stalling tactic which allows the banks to prolong the process so their accounting for each quarter only reveals the numbers they want their stockholders to see.

The government has announced a December 31 deadline to convert almost 375,000 borrowers with trial modifications into permanent modifications.  Banks have been threatened with financial penalties for failing to make progress.

Legislation is being introduced that will allow federal judges to cut interest rates, reduce loan balances and lengthen mortgage terms in bankruptcy court.  Similar legislation was introduced in the spring but failed to gain the support it needed.

The administration had anticipated the $75 billion Making Home Affordable Program would help up to 4 million homeowners remain in their homes with newer more affordable loans. With the total number of permanent modifications now at 31,382, we can see clearly that this will be a long arduous road to recovery for the housing market.

Related posts:

1. Making Home Affordable
2. Democrats Say Lenders Are Falling Short
3. Making Home Affordable?
4. Permanent Loan Modifications Difficult To Achieve
5. Report: HAMP Program Only Making A Dent In Foreclosure Crisis

Comments

• Sponsor

• Recent Posts

  • Lenders Want More Credit Information
  • Federal Reserve Targets Big Banks
  • The Impending Reform of Fannie Mae and Freddie Mac
  • Tax Credit Helps Homes Sales Increase
  • Baltimore Sues Wells Fargo, NAACP Backs Off

• Archives

  • 2011
  • 2010
  • 2009
  • 2008

• Blogroll

  • Debt Consolidation Solutions
  • Mortage Lenders