One year after President Obama announced a new plan to help struggling homeowners avoid foreclosure, 116,000 borrowers had received permanent loan modifications under the administration's housing help program as of January, nearly double the number from the previous month, the Treasury Department announced today.
The agency said another 76,000 borrowers have been offered permanent modifications, but have yet to finalize them. In all, over 1 million homeowners have started trial modifications, saving an average of more than $500 a month, with total savings over $2.2 billion.
"With nearly 1 million homeowners paying less each month and the number of permanent modifications steadily rising, [the Home Affordable Modification Program] is doing the job it was designed to do," Phyllis Caldwell, head of Treasury's Homeownership Preservation Office, said in a statement. "Struggling families are receiving payment relief and the housing market is showing signs of stabilization."
When a loan is "modified," the homeowner may pay a lower interest rate on their mortgage, or have more time to pay the loan off. In tough times, it can be a win-win situation. The homeowner may be able to escape foreclosure, and the lender does not get stuck with an empty house it may have trouble selling.
Critics have argued that the embattled $75 billion program – designed to help 3 to 4 million borrowers through 2012 – has been too slow to get off the ground, pointing to the low number of permanent modifications, but Treasury today reiterated that the program remains "on pace to meet" the goal.
If the program is to do so, then the administration will have to succeed in its campaign to get mortgage servicers to increase the rate of conversions from trial modifications to permanent ones. Bank of America, for instance, has only finalized 12,761 permanent modifications out of a total of more than 1 million eligible borrowers. Wachovia Mortgage has made 330 permanent modifications out of 86,461 eligible homeowners.
Meanwhile, Republican lawmakers today accused the Treasury Department of trying to "cover up" the program's "total failure" by deleting numbers from the monthly reports.
Rep. Darrell Issa, the ranking Republican on the House Oversight and Government Reform Committee, and Rep. Jim Jordan, R-Ohio, cited in a letter to Treasury Secretary Tim Geithner that last month the department stopped disclosing the "Number of Requests for Financial Information Sent to Borrowers."
"It seems clear that the only reason for Treasury to stop reporting a metric that it had been tracking from the start is to cover up the $75 billion program's total failure," the lawmakers wrote in their letter to Geithner. "Your Treasury Department is being guided, not by 'the principles of transparency and accountability,' but by the desire to avoid blame for a shocking waste of taxpayer money."
However, an administration official says the number that the agency stopped reporting is simply the number of solicitations servicers sent to borrowers, not borrower applications. Rather than a measure of applicant interest, the number simply reflects how hard servicers were working to help modify borrowers' loans quickly, and the agency will still provide that information upon request, the official says.
In an exclusive interview with ABC News' Jake Tapper Feb. 7 on "This Week," Geithner touted the embattled program's achievements.
"We believe we're still on a path to be able to reach many, many more American households," Geithner said. "And of course we're going to make sure that those temporary modifications translate into permanent modifications.
"We're absolutely committed to make sure that translates into what we said it would, which is for eligible Americans – they're getting permanent modifications that substantially lower their monthly payment. For the average household, that translates into hundreds and hundreds of dollars every month for them."