New data released Friday shows that the story for the government’s foreclosure prevention program remains the same: Mortgage servicers have delivered relatively few permanent modifications, and hundreds of thousands of borrowers in trial modifications have yet to receive a final answer after many months of waiting.
To illustrate the performance of the servicers in the program, we’ve created an interactive breakdown of the data. There, you can see how bad the logjam is at each one.
Last month, we reported that approximately 100,000 homeowners had been stuck in trials for longer than six months and some homeowners had been stuck in trial modifications for as long as 10 months. That hasn’t changed – in fact, the numbers continue to worsen.
According to a ProPublica analysis of the new data, approximately 150,000 homeowners have been in a trial for longer than six months. The trials are supposed to last only three months – time for the homeowners to turn in all their financial documentation and demonstrate an ability to make the lower monthly payments.
Attention, bookmarks! We've collected all of our coverage of the government's mortgage modification program into one place. You can also find our interactive charts showing how well -- or poorly -- each mortgage servicer has been performing in the program.
We’ve created a resource page on the government’s loan modification program that puts all of our reporting in one place. Take a look. For those looking for a rundown, below is our summary of the program and the problems it has encountered.
The administration’s foreclosure prevention program began operation last April. The $75 billion program, called Making Home Affordable, focuses on reducing the monthly mortgage payments of struggling homeowners.
Mortgages that are owned or guaranteed by government wards Freddie Mac or Fannie Mae are automatically eligible. Other mortgages are eligible only if the servicer has signed a contract with the Treasury Department. More than 100 servicers have signed up. Mortgage servicers are the companies that specialize in collecting payments and handling individual accounts; they are frequently subsidiaries of banks, but sometimes are stand-alone companies.
Earlier this month, we asked our readers to tell us if they’d been stuck in a trial modification in the government’s foreclose prevention program for half a year or longer. Trial periods are designed to last only three months, after which mortgage servicers are supposed to either give homeowners a permanent mod or drop them from the program.
While homeowners in trial modifications have had the benefit of seeing their monthly payments drop (by an average of $522), there are adverse consequences when a trial drags on, not the least of which is the stress and fear of homeowners not knowing whether they’ll be able to keep their homes.
Hundreds of readers wrote in. And the longest mod turned out to be just about the longest possible: Marlene Colon of Tinton Falls, N.J., and Deb Franklin of Airville, Pa. both first received trial mods starting in May, in the first few weeks of the program. That means they’ve been waiting nearly 10 months to find out whether they will be getting permanent modifications.
About 97,000 homeowners in the government’s mortgage modification program have been stuck in a trial period for over six months. Most of them, about 60,000, have their mortgages with a single mortgage servicer, JPMorgan Chase.
Trial periods are designed to last only three months, after which mortgage servicers are supposed to either give homeowners a permanent modification or drop them from the program. According to a ProPublica analysis, about 475,000 homeowners have been in a trial modification for longer than three months.
While the Treasury Department has so far allowed servicers to stretch the trials without repercussions, the government issued little-noticed guidelines in late December, warning that lenience will end at the end of this month. Servicers will have to clear out their backlogs, and those that don’t abide by the guidelines could face "financial penalties," said a Treasury spokeswoman. But Treasury has been vague on how big those penalties will be.
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- Making Home Affordable.gov
The administration’s web site for the foreclosure prevention program. Provides an FAQ, homeowner examples, and other tools to see whether you might qualify for the program.
- Foreclosure Avoidance Counselors
A list of HUD-approved housing counseling agencies nationwide.
- FTC Tips for Mortgage Servicing Consumers
Tips for homeowners from the Federal Trade Commission.
- Program Guidelines for Mortgage Servicers
These "supplemental directives" lay out how mortgage servicers are supposed to conduct the program.
- Compensation for Mortgage Servicers
This Treasury Department document lays out how mortgage servicers are compensated for completed modifications
- Calculated Risk
A finance and economics blog that provides news and metrics on the state of the housing market.