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Federal Mortgage Modification Program Hits Target
The federal government’s program to help homeowners facing foreclosure has reached its target of 500,000 mortgage modifications by November 1. “There is a lot of work left to do,” said Shaun Donovan, Secretary of Housing and Urban Development. “Today’s announcement is a good step forward, but we are nowhere near the finish line.” The long-term goal is to help 3,000,000 to 4,000,000 homeowners over the next three years.
Currently, 63 servicers are participating in the program, an increase over the 47 reported at the end of August, according to Treasury Department data. JP Morgan Chase has started the most modifications, with 117,000 underway, representing 27 percent of their eligible delinquencies. Bank of America increased its modifications by 62 percent during September, with nearly 95,000 trial modifications covering 11 percent of eligible loans underway.
Mortgage Bankers Association statistics note that, as of August, one in 7.6 mortgages was late with payments or in foreclosure. The poor economy and declining real estate prices are the primary reason for these foreclosures. Additionally, 25 percent of homeowners owe more on their house than it is currently worth.
A September report on loan servicer performance found that 19 percent of eligible homeowners had been offered loan modifications, though problems persist. For example, Bank of America – the servicer with the most eligible loans – had started modifications on just seven percent of its mortgages during September.
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