The United States Treasury recently released the latest progress report of loan modifications offered in February under Obama's Making Home Affordable initiative. The numbers show that efforts have not been fruitless, with more than $1.3 million homeowners receiving mortgage deals such as trial modifications and saving a median of more than $500 a month.
Progress has been slow to come. The Obama administration has come under fire for not doing enough to help the millions of homeowners who are underwater. Mortgage deals are available but success has thus far been spotty at best. Furthermore, job numbers continue to decline, despite the billions of dollars spent on stimulus packages. Critics cite numerous dubious projects that have received stimulus money.
The GOP put out a list of wasteful spending last February. The list includes a $246 million tax break for Hollywood producers to buy motion picture film as well as $88 million for a new arctic ship for the Coast Guard designed to break ice more effectively. Efforts to curb home foreclosures are a considerably larger expenditure, costing over $75 billion.
Mortgage Modifications Prove Effective for Eligible
The criticisms have sparked a renewed effort by the Obama Administration to lockdown real results in the real estate sector. The latest report, for example, indicates a 45 percent increase in the number of mortgage deals including permanent modifications under the Home Affordable Modification Program (HAMP). This brings the grand total to 170,000 new permanent modifications approved in February. 91,800 permanent modifications are pending acceptance.
The issue of acceptance, however, remains a major stumbling block for the success of the program. Of the Administrations 3-4 million goal, only a little over $1 million homeowners have been offered trial applications.
What’s more the HAMP program follows the same stringent guidelines as getting mortgage in the first place. Homeowners must have impeccable credit, and documentation indicating a detailed outline of housing income, taxes, and other expenses. Many homeowners simply do not qualify.
Banks Slow to Respond to Mortgage Modifications
Another damper in the Home Affordable programs are the banks themselves. A number of complaints have surfaced from homeowners who have been offered trial modifications only to be left holding the bag after the trial period ends. Several lawsuits against Bank of America and Wells Fargo have been filed due to the banks’ not honoring their HAMP commitments.
According to the Treasury Report of almost 3,500,000 homeowners eligible for HAMP, only 29 percent of those have been started on active trials or offered permanent mortgage loan modification. This a far cry from the goals set. States with the most active trials fall in line with the states hardest hit by the real estate meltdown. California and Florida currently top the list.
Moody’s issued a stinging report in February calling HAMP’s results “underwhelming”. Furthermore, the analyst group saw home sales falling another 8 percent by years end as a result. These missteps may prove costly for recovery efforts in the long run. However, recent news indicates that home prices are slowly rising and foreclosures are showing signs of decline as well. Banks are also stepping up efforts to offer more mortgage deals to distressed homeowners.
Written by Lani Shadduck
HULIQ.com
Data Source: U.S. Department of Treasury; HousingWire
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