Modification of troubled mortgages on slow pace
— -- About 12% of eligible borrowers have begun trial modifications of their mortgages since the start of a $75 billion federal program to rework home loans into more affordable monthly payments, the Treasury Department reported Wednesday.
Since the program's launch in March, 360,165 borrowers had received three-month trial modifications through August. If they keep up their payments for the trial period, lenders are supposed to extend the modifications for five years.
Lenders have offered trial modifications to 571,354 borrowers, or about 15% of those eligible, since March, but not all have enrolled.
Some economists say they're doubtful that the administration's goals are realistic, given the current pace of modification activity.
"It's still a slow ramping up," says Mark Zandi, at Moody's Economy.com. "It's much improved from earlier in the summer, and servicers are better staffed. But it's slow going compared to the serious delinquencies and foreclosures that continue to surge."
Among major lenders, those in the lead include JPMorgan Chase, which has started trial modifications on 25% of eligible mortgages that are 60 or more days delinquent. CitiMortgage started trial modifications on 23% of eligible mortgages.
Those trailing the pack include Wachovia, which has modified 2% of those eligible mortgages, Bank of America, which has modified 7% of those mortgages, and Wells Fargo, at 11%.
At the same time, foreclosure-related filings were reported on 358,471 properties last month, an increase of nearly 18% from August 2008, according to a RealtyTrac report out Thursday. One in 357 homes received a foreclosure filing in August. Those numbers include default notices, scheduled auctions and bank repossessions.
During a House financial services subcommittee Wednesday, legislators criticized lenders and the federal program's slow progress.
"I am disappointed in the pace of this program," said Rep. Barney Frank, D-Mass. "The servicers are not doing a very good job."
