ABC's Matthew Jaffe reports from Washington:
Only 31,382 homeowners have entered into permanent mortgage modifications as part of the Obama administration’s housing help program, the Treasury Department announced today.
Nearly 760,000 borrowers have signed up for the administration’s program, with 697,000 currently involved in trial modifications and now saving an average of $550 a month. However the key issue plaguing the embattled program is getting these trial modifications made permanent.
Today’s report, which reflects servicer performance through the end of November, was the first time the Department has included the number of modifications that have transitioned from the trial phase into permanent modifications. According to today’s report, Bank of America had only completed 98 permanent modifications and CitiMortgage only 271. Other servicers had fared better, with GMAC completing 7,111 and JP Morgan Chase 4,302.
On November 30 the administration announced a new campaign to maximize the number of trial modifications that are converted into permanent ones, warning mortgage companies that failure to meet performance obligations under the program could result in fines and sanctions.
Despite today’s disappointing numbers on permanent modification conversions, Treasury said in a statement that the $75 billion program “is on track to meet its goals over the next several years.” The administration has set a goal of helping 3 to 4 million homeowners over the course of the next few years.
Earlier this week, though, the Congressional Oversight Panel released a report warning that “as currently structured [the program] appears capable of preventing only a fraction of foreclosures”, noting that as of the end of October Treasury had only spent $2.3 million in TARP funding for the program.
At the Panel’s hearing this morning featuring Treasury Secretary Tim Geithner, the panel’s chair Elizabeth Warren grilled the Treasury chief about the program.
“Are we creating a program in which we're talking about potentially spending $75 billion to try to modify people into mortgages that will reduce the number of foreclosures in the short term, but just kick the can on down the road so that we'll be looking at an economy with elevated mortgage foreclosures not just for a year or two, but for many years?” she asked.
“The whole foreclosure rate across the country now is really driven by what's happened to unemployment and what's happened to income of Americans,” replied Geithner. “And I think our judgment is the best things we can do now to help mitigate that risk is to help get the economy growing again, bringing unemployment down as quickly as we can, put people back to work, and to continue to make sure we're providing overall stability to the housing market.”
At a House Financial Services Committee hearing on the issue on Tuesday, Rep. Maxine Waters, D-CA, told Treasury’s TARP chief Herb Allison, “Treasury, you’re just too slow. You talk about all the things you’re going to do, how you’re going to improve. We’ve been listening too long.”
Allison acknowledged that the Department was “not satisfied yet with how this program is unfolding,” noting that, “We still have a lot of work to do.”
Today's full report can be found HERE.