See these quotes from a recent LA Times article:
In its first report on the Obama administration’s efforts to prod lenders to help as many as 4 million homeowners by reducing their mortgage payments, the Treasury Department said just 9% of eligible loans had been changed.
Loans were modified even less often by the two mega-banks that dominate the mortgage market: Wells Fargo & Co. reduced payments for only 6% of its eligible home loans under the government’s program, and Bank of America Corp. modified just 4%.
The administration, under tremendous pressure to help homeowners avoid foreclosure, has said that despite the low percentage of loans that had been modified under its plan, the program “has made rapid progress in a few short months” and was on track to help 3 million to 4 million eligible borrowers.
But critics say the effort is way behind.
“Congress and the administration need to end their ‘pretty please’ approach to the banks and instead finally force lenders to work to keep people in their homes,” said Kevin Stein, associate director of the California Reinvestment Coalition.
Some of the major lenders whose efforts were documented in the report released Tuesday had better success, such as GMAC and JPMorgan Chase & Co., which racked up 20% modification rates. Others, including Wells Fargo and BofA, said the report didn’t reflect their efforts to modify loans outside Obama’s Making Home Affordable program. They also said the workings of the 5-month-old program were not clarified until last month, forcing lenders to wait until just a couple of weeks ago to adopt it.
Sooner or later the federal government is going to have to use stronger tactics with banks than the pretty please approach if the pace of loan modifications is ever going to pick up significantly. However that kind of government intervention is a potentially dangerous precedent to set so who knows how this will pan out.
August 5th, 2009 at 2:09 pm
My request to ASC (America’s Servicing Co) for a loan modification last spring was rewarded, after several weeks of getting every conceivable document they asked for and faxing everything plus the kitchen sink to them) was not only a “NO,” they also charged me a $95 FEE for even ASKING for a loan modification.