More Home Owners Get Loan Modification Help
In June, the Home Affordable Modification Program helped 657,044 home owners avoid foreclosure through permanent loan modifications — that’s up from 633,459 in May, according to Treasury Department statistics released Friday.
However, while the number has grown, the numbers still fall short of the initial goal to help 3 million to 4 million borrowers through HAMP, which since 2009 has reduced mortgage payments to help borrowers avoid foreclosure. (Home owners in the program must make a few trial payments before the loan modification becomes permanent.)
For underwater home owners — those who owe more on their mortgages than their home is currently worth — about 6,941 have participated in a principal-reduction program, up from 4,911 last month, the Treasury Department reported late last week. For borrowers who qualified to have their loan balances reduced, they’ve seen median principal reductions of $67,751, or 30.7 percent.
“We’re continuing to see a slight improvement in home prices and a decline in mortgage defaults as our foreclosure prevention programs reach more borrowers upstream in the process,” says Raphael Bostic, Housing and Urban Development assistant secretary. “But we have much more work to do to help the market recover and to reach the many households there and across the nation who still face trouble.”
Source: “Number of Home Owners in Loan Modification Program Rises,” Dow Jones Business News (Aug. 5, 2011)
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Loan Modification Success Said to be Overlooked
A report from the voluntary, mortgage industry-driven Hope Now program says the mortgage industry has assisted 2.7 million homeowners in 2009 with mortgage modifications or repayment plans outside of the federal programs.
The statement released Wednesday lacked many details about what kind of help servicers were offering. “What are the circumstances?” asks economist Joel Naroff, with Naroff Economic Advisors. “It’s a large number, but they’re probably not helping a lot of people who we’d think of as getting a modification. They might just be rewriting a mortgage to more of a fixed rate.”
The Executive Director of Hope Now Faith Schwartz says industry efforts to solve the foreclosure problem are significant. “We’ve got to talk about what else is going on in the market. That’s the bigger picture,” she says.
Source: USA Today, Stephanie Armour (12/03/2009)
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Why the Foreclosure Plan Isn’t Working
Why can’t mortgage servicers process more than 9 percent of the applications of borrowers eligible for a government retooling of their loans?
Here are five reasons spelled out:
1. Fax machines. Most loan servicers require that applications be faxed. “It’s archaic. Given all the problems we’ve had with lost faxes, it seems unreasonable to use a fax system,” said Michael van Zalingen, director of homeownership services for Neighborhood Housing Services of Chicago.
2. Too many forms. Each servicers has its own form, as does Freddie Mac and Fannie Mae.
3. Outdated info. By the time the multiple forms get through the fax machine, the info is outdated and applicants have to start all over.
4. Green personnel. Servicers are hiring and training staff by the thousands and most of them haven’t been on the job long enough to understand the process.
5. Too complicated to comprehend. Some eligible borrowers are receiving loan modification offers without even applying, but the paperwork is such gobbledygook that they mistake it for trash and throw the offers away.
Source: CNNMoney, Tami Lubby (08/11/2009)
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