The Obama Administration’s foreclosure prevention program has started 909,953 permanent mortgage modifications through November 2011, but another 923,545 attempts at reducing monthly payments have been cancelled, according to the government’s latest figures.
The Home Affordable Modification Program (HAMP) initially targeted 3 million to 4 million homeowners, but it lists a pool of only 891,542 eligible delinquent borrowers as of Oct. 31. Meanwhile, cancelled modifications have steadily surpassed those that remain active since the program’s inception in 2009. HAMP is scheduled to end Dec. 31 of this year.
The program’s Congressional overseer and homeowner advocates have criticized the scope and commitment of mortgage servicers taking part in HAMP. The program has been riddled with problems and delays. Borrowers have complained of lost documents, inaccurate numbers used to deny modifications and overall sloppy paperwork.
The administration Monday, however, said it has saved an estimated $9.9 billion in monthly mortgage payments – saving a median of $530 per month, more than one-third of the median before-modification payment for the typical HAMP participant.
“As we compare today’s data to market data from last year – and certainly from the economic conditions when we took office in 2009 – it’s clear that we’ve made important progress in recovering from this housing crisis,” said HUD Assistant Secretary Raphael Bostic. “But with so many homeowners still struggling to pay their mortgages or move into more sustainable loans, we cannot rest on our laurels. There is still a lot of work to do.”
Nonetheless, up to 600,000 homeowners who are eligible for HAMP will likely not get a permanent modification before the program expires at the end of 2012, reported the Office of the Special Inspector General for the Troubled Asset Relief Program (TARP) late last year. TARP, the primary U.S. bailout vehicle, funds the modification program.
Even the Federal Reserve suggested pushing lenders harder to modify mortgages before properties become abandoned or neglected and result in “deadweight losses,” or costs that do not benefit anyone. The Fed said this in a housing market white paper submitted to some Congressional leaders last week by Fed Chairman Ben Bernanke.
“These deadweight losses compound the losses that households and creditors
already bear and can result in further downward pressure on house prices,” the Fed said. “Some of these foreclosures can be avoided if lenders pursue appropriate loan modifications aggressively, and if servicers are provided greater incentives to pursue alternatives to foreclosure.”