Many homeowners with modified mortgages are behind on payments

[n2doc]

About 25% of borrowers helped under the administration's massive foreclosure prevention program are delinquent, the Treasury Department says.

By Renae Merle
December 5, 2009

Reporting from Washington - About 25% of borrowers helped under the administration's massive foreclosure prevention plan have already fallen behind on their new mortgage payments, according to government data that raise new questions about the program's effectiveness.

The delinquency figures reflect the latest troubles of the program, known as Making Home Affordable. Treasury Department officials this week announced a campaign to put new pressure on lenders to do more to move struggling homeowners into loans with easier terms.

So far, more than 650,000 borrowers have been enrolled into the initial or trial phase of the program and have seen their payments lowered by an average of $640 a month, or 40%. But a recent survey of large mortgage servicers published by the Treasury Department found that more than 25% of borrowers in the program were not current on their trial payments.

Moving homeowners from the trial phase into a permanent modification has become the program's latest stumbling block. Borrowers must make three payments and submit documents proving that they qualify for the program to move forward, but a bottleneck has emerged, with few homeowners making it through. JPMorgan Chase & Co., which signed up more than 178,000 homeowners, noted last month that 22% of borrowers helped didn't make their first payment.

If borrowers struggle to keep up with their modified mortgage payments, housing experts said, it could diminish the effectiveness of the program, which the administration hopes will help as many as 4 million borrowers.

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http://www.latimes.com/business/la-fi-mortgage5-2009dec05,0,7682612.story

[FBaggins]

1. That's largely why the banks don't want to do it

and why the move to permanent recasting hasn't gotten anywhere.

IIRC, it was between 40%-50% falling behind within the first year.

[stray cat]

2. Some people can't afford the house they buy even if someone else pays a chunk of it

either to lack of finances or spending on other things or bad luck like losing a job

[adamuu]

3. That means 75% were successfully helped. n/t

[Craftsman]

5. For now

I figure before the smoke clears most will fall behind.

[adamuu]

6. Then many will still have been helped. n/t

[Igel]

9. Yes, many will have been helped.

Of course, it means that the average cost of helping each house owner will have to be adjusted upwards.

It also means many will not have been helped, with banks being condemned for not helping those who simply couldn't be helped under the terms of the program. Which is the reason, probably, for this article. Such a rant was recently published by some news company--so many to help, and these bad, evil banks are responsible for the reason to many haven't been promoted from trial program to permanent status. Ah: Over 25% fail to make their first trial payment. Gee, that means 100% might be a tad difficult to achieve.

"Some helped" isn't the point. Your point, perhaps, but that's for a different article, a different discourse. Not the one that went before; not this one.

[adamuu]

10. okay n/t

[SoCalDem]

4. If you are under-employed/unemployed, you will have a problem

modified or not..

Many people signed on the line, when they were in no position to buy a house ..at any price... as long as the phony/el cheapo payments were in force, they could "afford" it, but when real payments kicked in, or someone lost some income, they were screwed.

The facts are simple though..

If someone "bought" a house with nothing down,and partial interest only payments, and while in the house, used it as an ATM to remove phantom equity, they just got to stay in a place probably nicer than they could afford..for a while, and now it's time to move..

or if they re-fied and re-fied to get more money out, and now owe more than the house is worth, they probably "got their money", and then some..and now it's time to move..

[stray cat]

7. I like many would love to own a house

but I don't have enough money saved for a realistic downpayment - so I rent.

[SoCalDem]

8. and you will probably always have a roof over your head

and will not end up with your stuff in the yard.

Until fairly recently in historical terms, home-buying involved 20-30% down and a mortgage based on the main wage-earner only. ..and the monthly payment could not exceed 25% of the take-home pay. Using that formula, most people did not default.