Report: Gov't Mortgage Modification Program Falling Short of Goals

Although thousands of homeowners have gotten mortgage modifications under the Making Home Affordable program, it's still well short of the millions the Obama administration hoped to help with the program

May 06, 2011

More than 670,000 homeowners have gotten permanent mortgage modifications through the end of the first quarter of the year, the government reported today.

That's still well short of the 4 million the Obama administration had projected when it announced the Making Home Affordable program in 2009. About 587,000 of those homeowners are still in the program, which  offers both borrowers and lenders financial incentives to modify loans that are on the verge of default.

About 1.5 million have received trial modifications since the program started, but nearly half of those have been cancelled without the participants ever moving on to a permament modification. There are currently about 137,000 homeowners in trial modifications.

Late last year, a Congressional panel estimated that the program would end up helping only about 700,000 homeowners.

Other administration programs to help those facing foreclosure also have made little progress. About 20,000 homeowners have gotten modifications on second mortgages, and two other programs that encourage banks and homeowners to complete short sales have also helped only a few thousand homeowners.

Many consumer groups say the programs are not working because banks are not making a strong effort to participate. Thousands of homeowners have filed complaints with the government about unanswered phone calls and other failed efforts to contact lenders, according to government records released last month.

The programs have come under fire from Republicans in the U.S. House, who voted in March to cancel the Making Home Affordable program, along with other administration foreclosure efforts. The bills have not been taken up in the Democrat-controlled Senate, and President Obama has said he would veto the bills if they came to his desk.

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