Permanent Loan Modifications Difficult To Achieve

The Making Home Affordable Program has begun trial modifications for more than 650,000 eligible borrowers since being launched in February.  According to data released by the Treasury Department, 1 in 5 eligible homeowners has enrolled in the program.  Almost 900,000 borrowers have been offered trial modification plans and servicers have distributed over 2 million request for financial information to eligible borrowers.

The program, which provides financial incentives to servicers, is on track to meet its goal of offering help to more than 3.5 million borrowers over the next several years.  The success of the program depends heavily on how many trial modifications become permanent.  The Treasury Department has not released the new data regarding loan modification re-defaults.   The last report issued in December 2008 showed re-default rates as high as 50%.

JP Morgan Chase & Co., in a report released last week,  stated that 92,000 of its customers have made at least 3 trial payments under the program, but only 26% of those borrowers submitted all of the required documentation for a permanent modification.

Many are complaining about the number of permanent modifications,  saying the strict criteria of servicers in the industry is making it increasingly more difficult for borrowers to meet the requirements for converting to a permanent loan modification.

Many agree that loosening documentation requirements would allow servicers more freedom to work with borrowers.

Some servicers have resorted to incentive tactics to encourage their borrowers to complete and return all needed documentation.  Saxon recently offered over 5000 Florida and California borrowers in their trial program a $25 gift card if they brought their completed paperwork to a local event… 15% of borrowers responded.   Freddie Mac recently hired Titanium Solutions Inc. to go door-to-door gathering needed documents from their borrowers.

Homeowners who qualify for the Making Home Affordable Program will find that working with their lender will require them to remain diligent with documentation and remaining current on their new modified monthly payment to receive a permanent modification.

Related posts:

1. FHA Planning Stricter Loan Requirements
2. Lenders Resist Making Home Affordable
3. Report: HAMP Program Only Making A Dent In Foreclosure Crisis
4. FTC Proposes Up-Front Fee Ban for Mortgage Modifications
5. Foreclosure Prevention Program, Fixer Upper Or Turn Key Ready?

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