Federal Programs to Modify Mortgages Helps Few Struggling Homeowners

Federal Programs to Modify Mortgages helps few struggling homeowners
by Naomi Snyder - The Tennessean - August 5, 2009

Jureen Hendrickson used to have a job collecting debts for a bank. Now she finds herself on the other side of the phone line, desperately trying to get Bank of America to modify her home loan to avoid foreclosure.

"I'm calling and I'm asking for help, and I don't feel as if they're working with me,'' said Hendrickson, a 46-year-old who lost her job in March. "I'm up a creek without a paddle."

Five months after the Obama administration launched its ambitious $75 billion "Making Home Affordable" plan to provide incentives for financial institutions to modify home loans for struggling homeowners, only about 235,000 loans have been modified, or about 9 percent of those eligible nationwide.

Bank of America modified just 4 percent of eligible loans, and Wells Fargo 6 percent, a U.S. Treasury report said. Wachovia Corp., which was taken over by Wells Fargo in December, modified 2 percent.

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, a Treasury assistant secretary. "We expect them to do more."

Lenders say they're working to address problem loans, and some have been modifying home loans long before the federal government's program, but local housing counselors say not enough has been done on either front.

"The whole (federal) program is rife with problems and chaos,'' said Jarmaine Betts, counseling director at Affordable Housing Resources in Nashville.

At the current rate, it would take more than seven years to reach the government's goal of 4 million loan modifications. The Treasury, however, said it remains optimistic that the program can reach its goal of handling 3 million to 4 million loans in three years, assuming modifications speed up.

Betts said he has counseled close to 100 homeowners in trouble on mortgages since April, but only 10 to 15 have seen their home loans modified. One client has been waiting seven months for an answer.