Equal Numbers Approved, Rejected for Permanent Loan Mods
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- Peter King | December 11, 2009
Nearly as many homeowners are being rejected as are being approved for permanent loan modifications under the government’s main foreclosure prevention program, according to Treasury officials.
According to Thursday’s first official report on the success rate of the Obama Administration’s Making Home Affordable Program, 31,382 borrowers have been approved for permanent loan modifications after successfully completing a three-month trial period. However, another 30,650 homeowners in trial modifications have been turned down, Treasury officials said.
Homeowners rejected for permanent loan modifications were turned down for a variety of reasons, according to representatives of major lenders participating in the program, including failure to make the required trial payments, not submitting required documentation and having insufficient income to qualify for a permanent modification.
Lenders say that homeowners need only state their income to be approved for a trial modification, but are sometimes turned down for permanent status when documentation cannot support their income claims.
However, there continue to be widespread reports of borrowers complaining of lenders making repeated requests for documents previously submitted, reporting on-time trial modification payments as delinquent and failing to approve or deny trial modifications for permanent status for weeks and months after the completion of the three-month trial period.
80 percent still await decision
The 31,382 borrowers approved for permanent loan modifications represent just under 9 percent of the 360,000 trial loan modifications undertaken as of the end of August, which would be eligible for conversions to permanent status as of the end of November. Including those rejected for permanent modifications, that means that over 80 percent of trial modifications that have completed their three-month trial periods have yet to be approved or denied.
“According to servicer reports, most borrowers in modifications are meeting their responsibilities to make their payments,” a Treasury Department statement read. “Servicers need to do their part to help borrowers complete the process and get to the finish line.”
With 759,000 trial modifications having been initiated and another quarter million offers for trial modifications extended, administration officials say the program is on track to reach its goal of assisting 3-4 million at-risk homeowners. Homeowners in trial modifications are saving an average of $550 a month on their mortgage payments, according to the report.
The report said the 700,000 trial modifications now under way represent just under one-quarter of the 3.3 million mortgages currently delinquent by 60 days or more and eligible for the program.
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