The Obama administration's mortgage relief plan provided help to 66,500 out of 900,000 enrolled in program which is only 7 percent of borrowers who signed up last year.
The Treasury Department reported today that the $75 billion program that was launched back in March of last year was supposed to help about 900,000 borrowers, but by the end of December only about 66,500 homeowners had received permanent relief while another 46,000 have been approved and should be finalized soon.
Despite the efforts of the Treasury Department, which is pressing about 100 mortgage companies that are participating in the program to do a better job, the program is operating at a snails pace.
The overall goal is to make borrowers' mortgages more affordable by reducing the interest rate on their mortgage to as low as 2 percent. First, the borrowers receive temporary modifications in their interest rate, which after the borrowers make three payments on time and complete all the necessary paperwork the lowered interest rate is supposed to become permanent.
One aspect of the slow pace of the program is that many mortgage companies are saying that they are struggling to get homeowners to return all the necessary paperwork to make the interest rate reduction permanent. Only about half of the borrowers who enrolled last summer might be approved for a permanent modification and the rest will either not send back all the required documents or it may be found that they are ineligible for an interest rate modification according to the government's criteria.
Both housing counselors and homeowners say that navigating the bureaucratic maze often seems to be a daunting and impossible task.
As the economy improves for some, others are still struggling and as a result more borrowers are falling behind on their mortgage payments. According to the Treasury Department over half of the borrowers that were approved for a loan modification have seen their income cut and with unemployment now over 10 percent nationally it's expected to remain elevated for the remainder of the year.
Real Estate Industry executives and housing advocates have been involved in talks with the Treasury Department to develop more programs to aid the unemployed, but nothing has happened as of yet.