Mortgage Modifications Up in January 2010

RISMEDIA, February 19, 2010—(MCT)—The number of mortgages with permanently lowered monthly payments under the Obama administration’s foreclosure prevention program increased dramatically in January 2010.

In all, the number went up to 116,297, with an additional 76,482 modifications approved and awaiting acceptance by the borrower, the Treasury Department recently reported.

Administration officials said that the program, which offers banks and other mortgage servicers cash incentives to reduce monthly payments, has saved homeowners a total of $2.2 billion. The median savings have been about $500 a month.

The data represent a major improvement over the 66,465 permanent modifications at the end of December 2009 under the $75 billion Home Affordable Modification Program, which was unveiled a year ago to try to ease the foreclosure crisis.

In addition, the number of three-month trial mortgage modifications started under the program topped 1 million out of the approximately 3.4 million mortgages eligible because they were at least 60 days delinquent.

But critics have said the program has yet to have a major effect on foreclosures, which Moody’s Economy.com projects will total 2.4 million this year. Obama administration officials said the program is helping and on track to meet its goal of modifying 3 million to 4 million mortgages through 2012.

The Los Angeles-Orange County area accounted for 5.8% of all the modifications, trailing only the New York City area’s 6.1%.

Major mortgage servicers continued to increase their participation. With 111,247 active trial modifications through January and 10,929 permanent modifications, half of all eligible homeowners with loans serviced by CitiMortgage Inc., had lower payments through the program, according to the Treasury data. That figure was 38% at JPMorgan Chase and Wells Fargo Bank. For all participating servicers, it was 28%. Bank of America, one of the nation’s largest servicers had lowered payments for 22% of its eligible mortgage customers. That marked an improvement from 19% at the end of December and just 15% at the end of November, when the administration began pushing servicers to make more of the trial modifications permanent.

Distributed by McClatchy-Tribune Information Services.

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