UPDATE:Treasury: Mortgage Servicer Performance 'Uneven'
August 04 2009 - 9:24AM
Dow Jones News
Only 9% of eligible borrowers have received trial modifications
under the Obama administration's ambitious effort to help
struggling homeowners, according to data released by the U.S.
Treasury Department on Tuesday.
The administration announced its highly-anticipated plan to
stabilize the housing market in February through a program that
provides $75 billion in incentives for borrowers, mortgage
servicers and investors. However, foreclosures are still mounting
amid ongoing weakness in the labor market. U.S. foreclosure
activity in the second quarter was up 11%, according to a July
RealtyTrac report.
The administration Tuesday acknowledged that the performance of
participating mortgage servicers has been "uneven."
For instance, Bank of America has started trial modifications
with only 4% of the eligible mortgages in its servicing portfolio,
according to a report Treasury provided. Meanwhile, J.P. Morgan
Chase Bank has started trial modifications on behalf of 20% of its
eligible delinquencies. Wells Fargo Bank's share is 6% while trial
modifications started by Wachovia Mortgage make up just 2% of
estimated eligible delinquent loans, the data shows.
Despite the low numbers, Treasury still says the "Making Home
Affordable" loan modification program is on pace to offer
assistance to up to 4 million homeowners over the next three
years.
The administration said it has asked servicers to more than
double the total of trial modifications started by Nov. 1, which
would bring the cumulative total to 500,000 in a few months.
Currently, only 235,247 modifications have been started.
Additionally, the administration said it has asked Freddie Mac
to audit loan modification applications that have been
declined.
Meanwhile, Treasury on Tuesday announced plans to provide
transparency reports on modifications on a monthly basis.
-By Maya Jackson Randall and Jessica Holzer, Dow Jones
Newswires; 202-862-9255, maya.jackson-randall@dowjones.com