The Obama administration's mortgage modification program is designed to help struggling homeowners avoid foreclosure, but nearly half the 1.3 million homeowners who have started the program are already out, according to government statistics.
The Home Affordable Modification Program (HAMP)began in April 2009.
In their Housing Scorecard for August, the Treasury Department and Department of Housing and Urban Development (HUD) report more than 37,000 homeowners received a HAMP permanent modification in July. Many others granted a trial modification have, for one reason or another, been denied or have been unable to keep up the new monthly payments.
Those denied a permanent modification often find themselves deeper in the hole, due to several months of reduced payments and fees.
"Chase Mortgage said we could do a trail loan modification so we did for six months," Robert, of Canyon Country, Calif., told ConsumerAffairs.com. "We were told after six months we did not qualify. Then we received a letter stating we need to come up with $17,000.00 or our house would go to foreclosure. We never talked with one person, we talked with many. They acted as if we never gave them a dime in those six months."
Program changes
The government attributes a drop off in the number of new trial modifications to changes in upfront documentation requirements, adopted June 1.
"This policy change streamlines the process to help more eligible homeowners convert to a permanent modification," the agencies said in their Report Card. "Homeowners in permanent modifications are experiencing a median payment reduction of 36 percent, or more than $500 per month."
Despite problems in the program, the government says there have been twice as many modification arrangements begun compared with foreclosure completions. More than 3.15 million modification arrangements were done from April 2009 through the end of June 2010. That number, however, includes trial modifications that may, or may not, have become permanent.
Bright spot
In a positive development in an otherwise still-dreary housing market, the government reports housing prices remained level in July after 30 straight months of decline, while some price predictions have improved.
In addition, historic low interest rates continued to promote home affordability and refinancing options for the nation's families. However, the market remains fragile with foreclosure starts showing a slight increase and serious delinquencies continuing to work through the pipeline.
"While there has been some stabilization in the housing market, it remains clear that we have more work ahead," said HUD Assistant Secretary Raphael Bostic. "Through the Obama administration's efforts over the past 16 months, we have seen increased price stabilization and improved home affordability for prospective, qualified homebuyers. At the same time, we know that we must continue to provide support to underwater borrowers, unemployed homeowners, and to the nation's hardest hit neighborhoods."
