Let's take a look:
Why Mortgage Modification Isn't Working
The loan adjustment success rate is just 1%.
Last year more than two million Americans lost their homes to foreclosure. This year that number is expected to be even higher.
Foreclosure takes a huge toll on homeowners and their families, and sends shock waves throughout the economy. Yet since the start of the recession in 2007, more than five million homes have been taken back by lenders. The Center for Responsible Lending estimates that as many as 13 million more homes could fall into foreclosure over the next five years.
To combat the foreclosure epidemic, the Obama administration created the Home Affordable Modification Program (HAMP) last February. As part of this program, the Treasury Department plans to spend up to $75 billion in financing mortgage "modifications" for struggling homeowners.
The modification process changes the terms of the mortgage with the aim of making it more affordable, typically by reducing a borrower's interest rate, lowering his monthly payment, or waiving or reducing past charges. Unfortunately, HAMP has had less than stellar results.
Since the program began, more than three million homeowners have become eligible for assistance. In turn, mortgage servicers have reached out to these borrowers, initiating the modification process. Roughly 760,000 homeowners have received loan modifications on a trial basis. But just 31,000 modifications have been made permanent.
That's a success rate of just 1%. This means that up to 99% of eligible homeowners struggling with their mortgage payments have been unable thus far to modify their loans.
http://online.wsj.com/article/SB10001424052748704541004575011420045962424.html?mod=googlenews_wsj
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