According to the monthly progress report on the performance of the loan modification program introduced by the Obama administration, only 15% of the borrowers eligible to participate in the program have been offered loan modification. Among the 38 firms that are participating in the program, several loan servicing companies including American Home Mortgage Servicing and PNC Financial Services Group Inc. have not modified a single loan. The best performer among large firms is Saxon Mortgage Services Inc., which has implemented trial loan modifications to 25% of its eligible borrowers. Mortgage firms have been criticized for not doing enough to expedite the program.
The government's initial target was to assist up to 4 million distressed homeowners. However, just about 200,000 homeowners have received loan modifications so far. According to RealtyTrac, 1.5 million households have received at least 1 foreclosure notice in the first 6 months of this year. "We want to go faster," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "There are a bunch of servicers that are lacking in performance. They have to lift their game." Some analysts say that modification procedures take time given the complexity involved. "A lot of these modifications are very hard to do, it takes time and you can't rush it," said Paul Miller, a bank analyst for FBR Capital Markets.
These numbers aren’t really surprising. Think about it, banks and financial institutions aren’t exactly excited about going to home owners and reducing interest rates and loan amounts. In addition, many of these loans are owned by investors who need to be consulted. Most banks won’t even talk to you unless you are behind on your payments at least 30-60 days. Many homeowners have tried to call in advance and can’t get anywhere, most banks and mortgage companies won’t even talk to you. Seems a little bit counter productive. If you have a homeowner that is concerned about making payments and calls ahead of time, wouldn’t you think it would be a good idea to try and work something out before it gets bad, before the homeowner looses hope? Some have said banks want your credit to get trashed before they will work you. I don’t think that’s the case. I just think banks are still overwhelmed with defaults they have deal with. They are dealing with the flames/fire and not the smoke. Loan modifications make a lot of sense for all parties involved. Efforts need to be improved on both sides. If you are having trouble making your mortgage payments, there are options. Contact me, or another real estate professional, to find out what your options are. You will almost always be better off than waiting until it is too late.
All of the information that has been coming out of DC sure has been misleading. I agree with you that the banks are not making much of an effort to realy help the people who need it. A person needs to totally destroy their credit before anyone will even listen. These refi modifications have been a joke. And forget it if you have a second mortgage. Thanks for your post and good luck
Posted by: Craig Ballhagen | August 10, 2009 at 08:33 PM