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Permanent Mortgage Modifications Up in April 2010
Posted By susanne On May 18, 2010 @ 3:59 PM In Home Owner News,Real Estate,Real Estate News,Today's Marketplace,Today's Top Story - Consumer | Comments Disabled
RISMEDIA, May 19, 2010—(MCT)-The Obama administration recently announced that its program to prevent foreclosures has continued to make slow but steady progress, with the number of homeowners who have received permanently modified mortgages up about 13% in April 2010.
The 295,348 permanent modifications amount to about a quarter of the 1.2 million trial modifications started under the program, which began last year.
During the trial, banks and mortgage servicers reduced a homeowner’s monthly payment for 90 days, with a median reduction of about $500. If the homeowner made the payments and submitted additional paperwork, the servicer made the modification permanent and became eligible for cash incentives from the government.
The Los Angeles-Orange County area now accounts for the most active trial and permanent modifications under the Home Affordable Modification Program, with 57,758, or 6.2% of the total, nudging past the New York City area.
Servicers have canceled a total of 277,640 trial modifications through April, according to the Treasury Department. That was up sharply from the 155,173 modifications that had been canceled through March. In addition, 3,744 people have had their permanent modifications canceled.
The increased cancellations largely were caused by many servicers granting temporary modifications without verifying the homeowners’ income. Starting June 1, 2010, the program will require all modifications be made based on verified income statements, Treasury officials said.
The $75 billion program has been criticized for moving too slowly to modify loans to create lower payments for 3-4 million people by the end of 2012. In December, the Obama administration began pushing mortgage services to move more quickly to convert eligible trial modifications to permanent ones.
Since then, the number of permanent modifications has nearly tripled. Large servicers such as Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc., which had been lagging behind smaller firms, have improved their performance.
Those large companies account for more than half of the active trial and permanent modifications. Still, they have turned only about 25% of their temporary modifications into permanent ones, compared with 50% or higher for some other lenders, such as GMAC and U.S. Bancorp.
Many homeowners and housing advocates have complained about bureaucratic runarounds by mortgage servicers in trying to get their mortgages modified. Treasury officials said they planned to collect new data about the performance of companies and release it beginning in July.
“The number of homeowners receiving significant relief through a mortgage modification continues to rise,” said Phyllis Caldwell, head of the Treasury’s Homeownership Preservation Office. “Our focus now is on improving the homeowner experience and holding servicers accountable for their performance.”
The new data will focus on the eight largest mortgage servicers. It will include the average time from the start of a trial modification to a permanent modification, how long it takes servicers to answer phone calls from homeowners and the time it takes them to respond to homeowner problems that come from housing counselors, attorneys and other third parties.
(c) 2010, Los Angeles Times.
Distributed by McClatchy-Tribune Information Services.
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