Only 66,000 homeowners, trying to avoid foreclosure, have received permanent mortgage modifications under the Obama administration's housing help plan, the Treasury Department announced today. It is yet another sign of struggles for the embattled program.
While more than 850,000 borrowers are now involved in trial modifications and are saving an average of over $500 a month, they are not getting these trial modifications made permanent.
When a mortgage is "modified," the interest rate on it may be reduced, or the time the homeowners have to pay off the loan may be extended. It can be in the best interests of both the lenders and borrowers. The homeowners don't lose their houses, and the mortgage companies don't have to take over houses they'll have trouble selling in the current economy.
The 66,000 homeowners now receiving permanent help, as well as another 46,000 who have been approved for but not yet finalized permanent modifications, do represent a marked improvement over the 31,000 permanent modifications posted at the end of November. But it is only a small fraction of the 1.1 million homeowners who have received trial modification offers.
Some of the nation's major mortgage companies continue to report low numbers.
Out of more than a million eligible homeowners, Bank of America has made only 3,183 permanent modifications. Wachovia Mortgage has nearly 83,000 eligible borrowers, but has converted only 344 permanent modifications.
Meanwhile, foreclosures in the country continue to hit record highs. Some 2.8 million U.S. homes were threatened with foreclosure in 2009, up 21 percent from the year before, according to the California-based foreclosure research firm RealtyTrac, Inc.
Despite the latest numbers, the Treasury Department said the $75 billion program launched in March "is on track to meet the goals" of helping 3 to 4 million homeowners through 2012.
"The data in this month's report demonstrates there has been significant acceleration at the rate that borrowers are being approved for permanent modifications," said Phyllis Caldwell, head of Treasury's Homeownership Preservation Office. She touted the administration's "aggressive work."
On a conference call with reporters Friday afternoon, Treasury Assistant Secretary Michael Barr emphasized that over 110,000 permanent modifications have been approved.
"We have significantly ramped up that effort," he said.
In late November Treasury announced a new campaign to bolster the performance of mortgage servicers. Among other steps, it sent out so-called "swat teams" to the headquarters of mortgage companies to observe their work first-hand .
"We believe there is much, much more work to be done to make sure the program is running right," Barr said, "but we're encouraged very much by the efforts we've seen to date."
"We are doing quite well in terms of providing people with an affordable option to keep them in their homes," he said.
Asked about the poor performance of some of the key mortgage companies, Caldwell said, "We are holding them accountable for the services that they promised to deliver."
But when pressed about whether or not Bank of America in particular was meeting their goals, Caldwell replied, "We're not really ready to talk about goals right now."