Loan Revision is Expected to Lead to Fewer Foreclosures

The US economy is on a tailspin what with unemployment at an all-time high. As people lose jobs they falter on mortgage payments. Hence, foreclosures have become common. Now the Federal government has come up with a program to help troubled homeowners. As part of this program, loans of homeowners are being modified, first on a temporary basis, and then after a period of three months, permanently.

However, the program has got off to a slow start. So far, lenders have only revised 31,382 loans permanently. This was revealed by the Treasury department. The report suggests that so far 759,058 loans have been modified on a trial basis. Also, modification offers have been given to sundry 1.03 million borrowers.

The director of the National Association of Consumer Bankruptcy Attorneys says that the program has failed in many respects. The country is staring at the prospect of many foreclosures and only a fraction of the people has got their loans modified.
However, the chief of Treasury Homeownership Preservation Office, Caldwell said that troubled borrowers are getting “immediate relief” because of the program. The loans of the people have been reduced on a permanent basis as part of the Home Affordable Modification Program (HAMP).

Caldwell is of the opinion that the loans of many people should be revised permanently. But what is irksome is that many lenders have failed to convert the experimental loans. Experts say that foreclosures would increase to 13 million from the present figure of eight million today. JPMorgan Chase & Co has done trial modifications of 143,027 people. Of these, 4,302 loans have been revised permanently. In comparison, Wells Fargo has placed 104,808 loans on an experimental basis while 3,537 loans have been modified permanently. Bank of America, on the other hand, has modified 158,462 loans on a trial basis. It has revised only 98 loans permanently. Citigroup has modified 103,478 on an experimental basis. Only 271 such loans have been modified permanently.

PNC Financial Services has modified 18 loans. About 10,591 loans have been placed on trial. The company also has 45,240 delinquent loans. PNC spokesperson Fred Solomon said that the company is devoted to helping the troubled homeowners through its various loan modification programs. Lenders receive $1,000 for each successful loan modification. Lenders who fail to do so will not be paid the incentive. However, it remains to be seen how fast the lenders are able to modify loans.