Mortgage modification nation: a failure to step up
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The federal Hope for Homeowners program launched at the beginning of last month to help struggling borrowers refinance into more affordable mortgages appears to be practically a nonstarter.
Reports the Associated Press in today’s San Francisco Chronicle:
The government expects only 20,000 troubled borrowers will be able to refinance into more affordable home loans by next fall under a new mortgage aid program passed by lawmakers over the summer. The $300 billion Hope for Homeowners program began Oct. 1. Designed by lawmakers eager to respond to the mortgage crisis, the Congressional Budget Office had projected it would let 400,000 troubled homeowners swap risky loans for conventional 30-year fixed rate loans with lower rates. But the early results are discouraging: The government received only 42 applications in the program’s first two weeks, according to the Federal Housing Administration. Since the applications take about 60 days to process, no loans have been approved.
The program relies on borrowers trying to persuade their lenders to volunteer and is limited to those who spend more than 31% of their incomes on their mortgages.
Housingwire.com, which first reported the low turnout, doesn’t place the blame on lenders:
The problem, however, may not be lenders, who say they’re more than willing to begin processing the loans. Instead, the problem sits with third-party investors that have thus far proven unwilling to take the minimum 10% haircut required to put borrowers into the program, plus an upfront premium payment. ...
-- Lauren Beale
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