No end to foreclosures is in sight
Even with the Obama administration’s loan modification and refinancing programs moving forward, the end of the foreclosure glut is not around the corner, a panel of government officials and consumer advocates told attendees of the recent National Assn. of Real Estate Editors conference.
Among the factors slowing progress are loan servicers still gearing up for the task, the recession, re-defaults and for-profit foreclosure prevention firms handing out misinformation.
With about three-quarters of mortgage servicers onboard, the loan modification program “is not performing up to expectations yet,” Deputy Treasury Secretary Seth Wheeler said. About 150,000 trial modifications have been completed and, as servicers work to beef up their staffing and training, tens of thousands are in the works. The goal is to rework 9 million mortgages over the next several months, Wheeler said.
Economic conditions, however, are working against refinancing, said John Walsh, chief of staff of the Office of the Comptroller of the Currency.
“The continued decline in home prices of course makes refinancing more difficult,” Walsh said. And unemployment is “only beginning to take its toll now.”
The agency is tracking data and will report on progress at the end of the month. A 52% failure rate was reported in the fall for mortgage modifications.
David Berenbaum, executive vice president of the National Community Reinvestment Coalition, called on the media to stop running ads by “for-profit racketeers who charge on average $2,900 to consumers for poor advice.” Examples he cited included counsel to not pay the mortgage or contact the service provider. HUD-approved counselors will help consumers for free.
Organizations administering foreclosure-mitigation counseling services include NeighborWorks America, a congressionally chartered nonprofit network of more than 240 community development and affordable housing organizations.
Kenneth D. Wade, chief executive of NeighborWorks, said there needs to be “transparency on results” and more information on people who are getting assistance “to see what’s working.”
If the new programs can keep up with the changing nature of the nation’s housing problems, he said, they “have a better chance at working.”