Nearly one month ahead of its self-set schedule, the government has reached the 500,000 mark for trial loan modifications under the Making Home Affordable program.
Yet as time passes, criticism of the program’s paperwork and delay is also on the rise.
The goal of 500,000 trial loan modifications by November 1 initially set in July pushed servicers to ramp up program implementation and sustain a faster pace of modifications; trial modifications are now being issued at a faster rate than new homeowners are becoming eligible. Still, the Administration believes that more can and should be done to assist struggling homeowners and to stabilize the housing market. As part of a continued effort to improve program performance, senior Treasury and HUD officials held the next in a series of meetings with servicers this afternoon, with discussion focused on improving servicer efficiency and responsiveness to borrowers during the modification process.
At a protest meeting in Philadelphia last week, speakers questioned if the $75 billion being paid to mortgage servicers would do more good if it was lent instead to homeowners, especially the growing ranks of the jobless.
“Getting a homeowner’s DTI (debt-to-income) ratio to 31 percent won’t help the unemployed, since 31 percent of their income is zero,” Paul Willen, senior economist and policy adviser Federal Reserve Bank of Boston, told Alan Heavens of the Philadelphia Inquirer.
Others complained about the volume of paperwork and the length of time the modification process takes - laying the blame on the loan servicers.
Deborah Goldberg of the National Fair Housing Alliance cited one instance where a borrower in Mississippi had a trial modification approved and had made five payments when the lender said her paperwork was lost.
“They’d waited five months to let her know,” she said.
Eileen Fitzgerald, chief operating officer of the nonprofit NeighborWorks America, said that working with the servicers “continues to be a challenge.”
“Our counselors have difficulty communicating with servicers,” she said. “Many of them are not following the guidelines, and some will not even work with us and we often spend two or more hours on the phone being switched from one extension to next.”