More Homeowners Approved for Permanent Loan Modifications
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- Kirk Haverkamp | January 19, 2010
The number of permanent loan modifications finalized under the government’s Making Home Affordable Program more than doubled in December, following criticism that few homeowners were obtaining long-term mortgage relief under the program.
The Treasury Department reported that, as of the end of December, 66,465 had received permanent loan modifications under the program, up from 31,382 at the end of November. Another 46,056 homeowners had been approved for permanent modifications by year’s end, requiring only their signatures on the final documents.
Another 143,000 trial loan modifications were begun in December, bringing the total number of trial modifications begun since the program’s inception to over 900,000. Nearly 1,165,000 homeowners have received trial loan modification offers.
Loan servicers pressured to act
The administration has been putting pressure on lenders over the past month to step up approval of eligible borrowers, sending representatives to work on-site to ensure that mortgage servicers are finalizing decisions on completed trial modifications and are obtaining any missing documents from borrowers. The administration is also conducting a temporary review period through Jan. 31 to ensure that borrowers are being fairly evaluated for the program.
The program was widely criticized following last month’s report, which included for the first time the number of homeowners who had obtained permanent modifications. It was widely reported that the 31,382 permanent modifications represented less than 5 percent of the trial loan modifications begun to date; an almost equal number of homeowners had been rejected for permanent modifications.
According to the current figures, the 112,000 homeowners now approved for permanent modifications represent 12.4 percent of all trial modifications begun under the program. However, that figure can be misleading; of the more than 900,000 trial modifications begun to date, only 487,000 have been underway for three months or more, the minimum required for approval for a permanent modification.
Two-thirds still await decisions
Based on that figure, 23 percent of all temporary modifications underway for at least three months have been approved for permanent status. Another 49,000 homeowners who began trial modifications are no longer in the program and presumably were rejected for permanent status, or just over 10 percent. That would still leave two-thirds of all trial loan modifications that have been underway for the three month minimum still awaiting approval or denial for permanent status.
The Treasury Department reports that the approximately 850,000 trial and permanent loan modifications currently underway have provided a median reduction of $500 in the homeowner’s monthly mortgage payment.
When first announced in March 2009, the Making Home Affordable loan modification program was intended to provide more affordable long-term mortgage payments for 3-4 million homeowners through 2012. Treasury officials say the new figures show they are on track to meet that goal.
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