The Obama administration today announced that over 650,000 borrowers have entered into trial loan modifications under a housing help program designed to keep people in their homes, a success rate of one in five eligible homeowners.
The latest report card on the Making Home Affordable program showed that of a total of 3.2 million eligible homeowners, 650,994 have now reduced their mortgages with trial plans, the Treasury Department said.
For the first time, Treasury also included in today's report the trial modification numbers for all 50 states. California has over 134,000 trial modifications underway, the report said, with Florida at 82,000 and Arizona at 34,000. The so-called sand states have been hit hardest by the recent housing crunch.
"As this report demonstrates, struggling homeowners in every state now benefit from reduced monthly mortgage payments and have an opportunity to stay in their homes," Treasury Assistant Secretary Michael Barr said in a statement. "The program is having a pronounced impact in areas particularly hard hit by the housing crisis. We're reaching borrowers at a larger scale than any other modification program to date, but there is still much more work to be done."
One crucial piece of work that the administration still needs to do is converting the trial modifications into permanent ones – conversion rates that were not included in today's report.
At an October 22 hearing of the Congressional Oversight Panel, the panel's boss Elizabeth Warren asked Treasury official Herb Allison to provide an estimate on what type of success rate the Department anticipated.
"We're really not sure what proportion" of modifications will become permanent, Allison said, before noting that a rate of 75 percent would be "a very ambitious success rate."
Another key issue for the department is boosting the performance of loan servicers. After initially getting off to a slow start, loan servicers have since stepped up their performance, but critics would like to see them do more.
CitiMortgage has now launched trial modifications for 40 percent of all eligible borrowers, GMAC for 35 percent, JP Morgan Chase for 32 percent, Wells Fargo for 29 percent, and Bank of America for 14 percent, today's report stated.
The administration has said the $50 billion housing help program, launched in March, will eventually help three to four million borrowers.