Mortgage modification program ahead of schedule, White House says
The $75-billion Making Home Affordable program, after a fitful start, has helped 500,000 borrowers get their payments lowered, the administration says.
By Jim Puzzanghera
October 8, 2009 8:57 a.m
Reporting from Washington – The Obama administration today said its much-criticized program to help homeowners avoid foreclosure had met its initial target of 500,000 trial mortgage modifications about a month ahead of schedule, touting the news as a sign the effort is gaining momentum.
FOR THE RECORD: An earlier version of this article incorrectly cited a cost of $50 billion for the Making Home Affordable program. The correct figure is $75 billion.
“We believe we are absolutely moving in the right direction and have reached an important turning point in our modification efforts . . . but we are nowhere near the finish line yet,” said Housing and Urban Development Secretary Shaun Donovan.Donovan and Treasury Secretary Timothy F. Geithner announced the milestone, which they said was reached Tuesday, and later today are scheduled to meet with representatives of major mortgage providers to push for continued improvement in the administration’s Making Home Affordable program.
The $75-billion program, announced in February, was designed to ease foreclosures by helping struggling homeowners modify the terms of their mortgages through refinancing, reduced principal or longer payment terms.But the program was slow in getting started, so the administration has been refining it. This spring it added cash incentives for borrowers and lenders to participate. And in July Geithner and Donovan pushed the chief executives of mortgage servicers to increase staff, streamline application procedures and improve their customer response.
The administration set a goal of 500,000 trial modifications by Nov. 1. That goal was reached three weeks ahead of time. Geithner said new trial modifications are being added at a faster rate than homeowners are becoming eligible for the program. Combined with a surge of about 3 million homeowners refinancing their mortgages because of lower interest rates, the housing market is beginning to stabilize, Geithner said.”The broad signs we’ve seen in the housing market . . . are encouraging,” he said. “They’re still early and we’re still living with some risk that housing is going to be a source of weakness for the broader economy and you still face an unacceptably large number of families at risk of losing a home they can afford to stay in.
Bank of America, the nation’s No. 1 mortgage servicer, said this week it would meet the goal set for it by the administration of 125,000 modifications by Nov. 1. The company said it had started about 95,000 modifications as of Sept. 30. Wells Fargo reported today that it had arranged 62,989 trial modifications under the program as of Sept. 30, nearly double the number of modifications it had done through the end of August.Administration officials said that about 40% of the nation’s estimated 1.2 million eligible homeowners are participating in the program.
To qualify, a homeowner must be living in the house and the loan can’t be above $729,500. The administration said it wants to modify 3 million to 4 million mortgages over the next three years.About 90% of the modifications are in a trial period, and administration officials are pushing to make those modifications permanent by streamlining documentation procedures.