On Monday November 30th the Obama administration announced that it intends to pressure mortgage companies to make a large number of temporarily modified have loans permanent before the end of the year. This is being done to aid homeowners that are struggling to make their monthly mortgage payments.
The Obama administration is calling together representatives from the major mortgage companies to Washington soon and intends to pressure them to increase their efforts in helping make monthly payments more affordable for borrowers that are in danger of foreclosure.
One reason for the increased pressure is the fact that a relatively low number of loan modifications have been turned into a permanent reduction in monthly payments. Many of payment reductions offered thus far from mortgage lenders have been short-term.
These loan modifications are being done as part of the $75 billion Home Affordable Modification Program. This program offers financial incentives to mortgage holders and banks in order to persuade them to alter loans to make them more affordable for qualified borrowers.
As of October 30, 2009 the Home Affordable Modification Program has temporarily modified over 650,000 mortgages. However, less than 1% of these were permanent as of September 1, 2009.
Currently around 375,000 of homeowners going through the three month trial modification to their home loan will be eligible for a permanent loan modification. To date, less than half of the eligible borrowers have submitted the proper paperwork to make it possible for lending services to permanently modify their mortgage payments.
The goal of the Obama administration is to increase the accountability of these lenders, if lenders are not meeting standards set as far as helping eligible homeowners with loan modifications, the lenders could be subjected to sanctions and possibly monetary penalties. Liaisons from the Treasury Department will be assigned to major mortgage services or those that are lagging to monitor their progress.
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