Feb

13

According to Report a Mere 10,000 Borrowers Were Able to Modify Loans to Avoid Foreclosures

February 13, 2010 |

Till October only a mere 10,000 borrowers have been able to modify their loans permanently according to a watchdog report. This is a grave evidence of the failure of the government to implement this ambitious plan and thus contain foreclosures.

The report focused on the limited success of the lenders to promote the borrowers from the temporary to the permanent status of loan modification during the previous five months. Only one out of three borrowers have signed for the programme and submitted the required documents.

The chairperson of the panel Elizabeth Warren speaking to reporters said that the plan was “not working” and that it had not made any dent in the record number of foreclosures. Over 14% of those with house mortgages were in some stage of foreclosure. With unemployment figures’ shooting up it is expected to increase further.

The Treasury would soon be releasing latest details but the statistics till October show that less than 5% of the house owners who successfully completed the trial modification period have been able to get permanent modification. What is worse is that the treasury is expecting over 40% of these to start defaulting again.

The programme mandates that the qualified borrowers can reduce their mortgage by as less as 2% for the forthcoming 5 years. Initially they are offered temporary modification which would become permanent if they completed the trial run without hiccups. It involved 3 running payments of the modified payments. Also the necessary paperwork had to be submitted providing proof of their earnings and financial troubles.

The report critically noted that the effort of the government was “capable of preventing only a fraction of the foreclosures.” Out of a fund of $75 billion for this programme the government has been able to spend only $2.3 million.

The banks are being largely accused for having received billions from bailout money and yet not done much for the hapless borrowers. In Capitol Hill the calls are becoming more strident for the government to take a tougher stand against the banks. John Taylor of National Community Reinvestment Coalition said, “Somebody needs to define for them what success is, and it’s not what’s happening.” His suggestion is that the Treasury should restructure all the mortgages after purchasing these rather than depending on the mortgage industry to do take these steps.

Julie Thompson, has been working on governmentrepohomes.com studying the foreclosures market, helping buyers on the finer points of Illinois Repo Homes. Try to visit governmentrepohomes.com and begin your Repossessed Homes search.

Article Source: According to Report a Mere 10,000 Borrowers Were Able to Modify Loans to Avoid Foreclosures