Increase in number of homeowners getting long term modification
Responding to heavy pressure from Washington the loan servicers are now expediting the process of permanent loan modification. By the end of last December the number had increased to 66,465 – it being 7.4% of all the trial modifications. In November the number had been 31,382. Another lot of 46,056 are waiting the final inking from the borrowers. 48,924 had been refused modifications for defaults, lack of documentation and other technical failures.
Simultaneously the numbers of delinquencies have increased. Phyllis Caldwell of Homeownership Preservation Office of the Treasury said, “Treasury is committed to working with servicers and borrowers to sustain this improved pace.”
The government expedited its own operations relating to laxity of servicers and sent SWAT groups to clear up jams. Banks were now ordered to submit progress in the matter twice a day.
But despite this concern remains as foreclosure numbers far outpaces the number of borrowers being helped. In 2009 there were 3 million foreclosure filings. David Berenbaum of National Community Reinvestment Coalition said, “We have a lot more to do if we’re going to address the foreclosure crisis. The servicers will have to step up to the plate.”
Moody’s expects the HAMP plan of the Obama government would save 400,000 or a maximum of 1 million homeowners from foreclosure. There are too many who are underwater. With loan value being more than the worth of the properties they cannot qualify for help under the programme. Many fail to provide required documents. But with increasing numbers falling into foreclosure the economy will further suffer with prices of real estate diminishing again by 10% by 2009 3rd quarter.
Three quarters of those running on trial modifications have been able to keep current. The servicers are complaining of not getting the documents timely while the borrowers allege that the banks are misplacing repeatedly these papers.
Treasury officials failed to give a definite answer when queried about solutions to this impasse.
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