By Mark Huffman
ConsumerAffairs.Com
April 15, 2010
Some homeowners who manage to negotiate modified mortgages are still struggling to make their monthly payments, according to new figures from the Treasury Department.
In a report on the government's program to encourage modification of distressed mortgages, government auditors say 2,879 homeowners with modified mortgages have again fallen behind on their payments. That compares with 1,500 in February and just over 1,000 in January.
Meanwhile, the number of homeowners defaulting on their loans after securing cheaper terms through the government's modification program nearly doubled in March.
The Treasury Department did not offer an explanation of the increasing number of people still struggling with a modified mortgage. Apparently, the new payment was not sufficiently lower to give the homeowner ample breathing room. In fact, a number of consumers have told ConsumerAffairs.com that, when they were finally offered new terms, the monthly payment was actually higher than it was previously.
Tracy, of Sacramento, Calif., is one of them.
"I have been working with Litton Loan Servicing since May 2009 to modify my loan," she told ConsumerAffairs.com. "I have had to submit documents numerous times even after I am initially told they receive them. I was in a trial modification from June 2009 until October 2009 when they submitted a modified loan higher than my current mortgage payment."
Other consumers have told a consistent story of being asked to fax specific documents over and over again, of never being able to speak with the same mortgage officer more than once, and generally getting the runaround. At the end of March only 230,000 homeowners had received permanent modifications out of 1.4 million who have begun trial modifications.
7 million potential foreclosures
At last count, about seven million Americans are behind on their mortgage payments, according to the government.
Meanwhile, the government's program to modify troubled mortgages, known as HAMP, took its lumps Wednesday from the Congressional Oversight Panel. In a report, the panel described HAMP's efforts as too slow, too ineffective and too unaccountable.
The panel maintains that the government isn't nimble enough to determine necessary changes, put them into place and generally stop foreclosures. While Treasury made changes to the program last month, the panel says most won't be felt until early next year, too late for millions of homeowners.
While the latest report shows more modified mortgage holders are in trouble, the panel warns it's going to get a lot worse. The panel says that temporarily lowering interest rates isn't enough of a help. The real problem, the panel says, are homes with mortgages greater than the value of the property.
The oversight panel is calling for greater accountability by Treasury Department officials who are administering HAMP. It said it wants the Department to judge itself on real success and clear goals.
