This morning a spokesperson for the Obama administration said that they are going to put a lot of added pressure on any and all mortgage companies that are not doing enough to help their borrowers who are at risk of foreclosure. Their goal is to increase the mortgage lenders efforts to help aid borrowers by utilizing the Making Homes Affordable plan implemented by the Obama administration.
One effort that will be used to make mortgage lenders comply is that the Treasury Department will begin to withhold payments from mortgage companies that are not using the program to its full potential and who are also not doing enough to make these changes permanent. The government oversight of the mortgage companies will be done through monitoring some of the larger mortgage companies through progress reports that are released daily.
The overall mission is to increase the amount of converted troubled home loans into new loans with lower monthly payments thus making them more affordable to borrowers so they can stay in their homes and avoid foreclosure.
By the end of October, close to 700,000 borrowers who were eligible had signed up for trials which lasted up to five months. These trails were used to determine if the loan modification would work and if it did then the loan would be made permanent.
Unfortunately by the beginning of September less than 2000 homeowners had completed the mortgage refinance process. It has been projected by the Treasury Department that 375,000 homeowners will be hitting their trial period deadline by the end of the year to convert their loan modification to a permanent status.
In an added effort to force mortgage companies to do a better job in December the Treasury Department will publish a list of the mortgage companies that are lagging behind in the hopes to embarrass them into complying with the program.
Phyllis Caldwell, who was recently named the head of the Treasury Department's homeownership preservation office, said, "We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones."
Under the Obama administration's $75 billion program, mortgage companies that work with borrowers and agree to lower payments for them will receive incentive payments for each modified loan in the amount of several thousand dollars, however until the modifications are made permanent those payments will not be paid.
Many mortgage companies said in their defense that they've had a lot of trouble getting borrowers to return all necessary documents to complete their modifications.
To many borrowers the documents were confusing and they didn't understand that the process would not be closed until the documents were delivered to the mortgage companies. Many times even when the documents were delivered on time they were not always completely filled out and lacked some key information to finalize the loan modification.
To help this process Freddie Mac hired an outside company, Titanium Solutions Inc., to send informed real estate agents around the nation to meet with borrowers to help them complete the paperwork process.
Analysts have predicted that the foreclosure crisis will most likely continue well into 2010 as unemployment rises further and pushes more people out of their homes and many feel that the program has not done enough to stop the tidal wave of foreclosures.
According to the Mortgage Bankers Association, by the end of September close to 14 percent of homeowners with mortgages were either behind on their payments or were already in foreclosure which is a record level for the ninth straight quarter.
The committee that monitors spending under Treasury's bailout program called The Congressional Oversight Panel concluded back in October that foreclosures were beginning to threaten families who took out conventional, fixed-rate mortgages and who put down payments of 10 to 20 percent on their homes.
A recent Congressional Oversight Panel report said in reference to the Treasury's program, known as the Home Affordable Modification Program, "is targeted at the housing crisis as it existed six months ago, rather than as it exists right now."
Homeowners who think they may be eligible for assistance should call 888-995-HOPE, or visit the Web site http://www.makinghomeaffordable.gov to learn more.