More Money Allocated for Foreclosure Relief
TARP funds set aside for the administration's foreclosure relief program grew to a total of $18.3 billion after the Treasury Department adjusted the caps on incentives for participating mortgage servicers. In the case of Countrywide, the total incentive payments it can receive nearly tripled to $5.1 billion.
Treasury adjusted the caps based on updated data and projections from the servicers and will make similar adjustments each quarter, according to a department spokeswoman.
Another servicer, Residential Credit Solutions, signed up, bringing the total to 16 participants in the Making Home Affordable program, which provides incentive payments to servicers for modifying mortgages for struggling homeowners.
Servicers get $1,000 for each modified loan that is current after a three-month trial period, as well as $1,000 annually for up to three years for each borrower that stays current on a modified loan. The government has other outlays too, such as subsidies for reducing borrowers' monthly payments and incentives for modifying mortgages that are not yet delinquent.
This all comes as ProPublica and other outlets have been reporting that the Making Home Affordable program has been off to a slow and confusing start. The reasons cross a wide spectrum, from servicers being slow to build up the internal staff and processes, to the adverse incentives created by second mortgages and the competing interests of homeowners, servicers and investors. One thing's clear: There's lots of frustration.
While we've been focusing on the modification portion of the program, several outlets have reported that the program's other element, designed to enable refinancing for borrowers who might not otherwise qualify, is also moving slowly; many in need don't qualify and rising interest rates are making the program face an uphill battle.
ProPublica will continue to follow the Making Home Affordable program. If you plan to apply for a modification, or already have, please take the questionnaire below (if you haven't already), and we'll be in touch with you shortly.
Banks and the government have fallen short in helping homeowners in danger of foreclosure.
The Story So Far
Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.
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