Obama Administration Attempts To Speed Up Help For Struggling Homeowners

By Sadie Bass

Jan 28, 2010 2:55pm

ABC's Matthew Jaffe reports: The Obama administration today streamlined the documentation requirements for its embattled housing aid plan in an effort to help more struggling homeowners faster. Starting June 1, homeowners will have to submit to lenders a simple set of documents upfront that proves their qualifications for the program. “We want this program to be about payment relief and affordability for homeowners, not about chasing documents back and forth,” said Phyllis Caldwell, chief of the Treasury Department’s Homeownership Preservation Office, on a conference call with reporters this afternoon. Previously borrowers could verbally declare their income and then provide documentation later, but this approach caused delays as borrowers compiled their forms while trying to convert their temporary mortgage modifications into permanent ones. That conversion from temporary to permanent modifications has proven to be a key problem plaguing the program. Since the $75 billion plan launched last March, only 66,000 homeowners have received permanent mortgage modifications, with another 45,000 homeowners having been approved for but not yet finalized their permanent modifications. With over 900,000 borrowers involved in trial modifications, such a low conversion rate has proven disappointing and – for a program designed to help three to four million people by the end of 2012 – it has also prompted criticism. The documents that borrowers will now have to submit to lenders upfront are two pay stubs, an electronic tax form, and a request for help. Both the tax form and the request for help are available online. “It is our hope that these enhancements will make this process easier for homeowners who are able to demonstrate that they qualify for the program and need the program to be able to sustain their mortgage and remain in their home,” said Caldwell, noting that mortgage companies such as GMAC that already have such procedures in place have been registering higher conversion rates. Click here for the full release from Treasury.

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