The Administration’s loan modification program is aiming for millions of mods over its three year lifespan, HUD Secretary Shaun Donovan told a conference of real estate journalists today and there are 200,000 trial modifications in process right now, 40,000 were added in the last week alone .That’s far more modifications than any other program, crowed Donovan, who could not help but mention that the beleaguered Hope for Homeowners program, launched during the waning months of the Bush Administration, generated a total of only 51 modified mortgages. The loan modification part of the program was project to help 3-5 million homeowners when it was launched in February.
In addition to the modifications underway, some one million homeowners have been contacted with information about the program and the program’s website has received some 23 million visits. Sixteen lenders are now participating, representing about 80 percent of all existing mortgages, he said. The update on modifications-considered the most critical aspect of the program because it is designed for prevent foreclosure of homeowners in default–was only the second report by an Administration official since details of the program were announced in early March. Previously, it was announced that some 55,000 borrowers had been contacted to participate in trial modifications.
The HUD secretary said the Administration’s efforts to reduce foreclosures and lower interest rates are starting to have an effect on housing markets, citing the recent increase in housing starts and a stabilizing of prices in California.
“Now is the time for servicers to step up their efforts. It’s time to go faster to get to a scale to solve the problem,” he said the journalists attending the annual meeting of the National Association of Real Estate Editors.
Donovan’s report on the foreclosure prevention program included fresh data that was not in the version of the speech posted on the HUD Web site.
Donovan opened with a discussion of the impact of the Administration’s reform of financial regulation on housing. He said the new Consumer Financial Protection Agency being established by the plan will be responsible for protecting real estate consumers and it will follow five principles:
Transparency. It will insist on simple disclaimers and presentation of data;
Simplicity. Information will be presented in plain vanilla format;
Fairness. Brokers will not allowed to have conflicts of interest and they will be compensated over based on the success of the loan;
Accept Risk. Originators will be required to retain at least 5 percent of the loan so that they have “skin in the game”-a vested interest in the success of the loan;
Access. The plan will insist that we strongly enforce the Community Reinvestment Act and fair lending laws, ensuring that underserved consumers and communities have access to financial services, lending and investment, he said.
“But with the failures to properly regulate the mortgage markets devastating to Wall Street and Main Street alike, I’m optimistic about what the President’s plan means for HUD, for our housing markets in general and for the confidence we need to get our economy moving again,” he said.