According to a report from the Treasury Department only about 9 percent of eligible borrowers have received trial modifications under the Obama administration’s effort to help struggling homeowners, the Wall Street Journal reported today.
Participating mortgage servicers, which receive government payments for modifying loans, have had “uneven” success at rescuing borrowers, Treasury acknowledged, as a wave of foreclosures continues to pummel the U.S. housing market. Bank of America Corp. and Wells Fargo Bank have started trial modifications for only 4 percent and 6 percent, respectively, of the eligible mortgages in their servicing portfolios, Treasury reported. Meanwhile, JPMorgan Chase & Co. has started trial modifications for 20 percent of eligible loans.
The administration is feeling heat from lawmakers on Capitol Hill, as its foreclosure-prevention effort has failed to meet expectations. A major component of the plan devotes $75 billion of financial-rescue funds to pay incentives to mortgage servicers, borrowers and investors that agree to modify loans. When it announced the program amid fanfare in February, the administration said it would help as many as 4 million borrowers avoid foreclosure. Officials say they are still on track to reach that goal. However, just 235,247 trial modifications have been started since the program was launched. Meanwhile, foreclosures are accelerating amid ongoing weakness in the labor market. U.S. foreclosure activity in the second quarter was up 11 percent, according to a July RealtyTrac report.
