MORTGAGE MODIFICATION FAILURES PUSH BORROWERS INTO FORECLOSURE

http://www.bloomberg.com/news/2010-11-02/mortgage-modifications-meant-to-save-u-s-homes-push-them-into-foreclosure.html





Homeowners being evicted while participating in programs designed to avert foreclosures is a scenario that is being repeated thousands of times at the biggest mortgage firms, according to groups that aid borrowers, Bloomberg News reported today. The government’s Home Affordable Modification Program came under fire at hearings last week for “trial” arrangements that allow late fees and debts to stack up and documents to disappear, triggering seizures. “Many homeowners end up facing foreclosure solely on the basis of the arrears accumulated during a trial modification,” said Julia Gordon, senior policy counsel at the Center for Responsible Lending, in Oct. 27 congressional testimony. “One incomplete payment or one accounting mistake can land you on an apparently unstoppable conveyor belt to eviction.” With as many as 7 million homes facing foreclosure or already seized, according to Zillow Inc., both the government and companies such as Bank of America and JPMorgan Chase & Co., the two biggest U.S. lenders, offered programs to forestall seizures by easing mortgage terms. Changes include cutting interest rates for as long as five years and extending repayment to 40 years. About half the 1.4 million temporary or “trial” modifications granted since the program’s March 2009 inception have been canceled, according to U.S. Treasury Department data. Only 466,708 borrowers have received permanent modifications. About one in five of the canceled modifications is either in foreclosure or bankruptcy, according to a Treasury survey of the nation’s eight largest mortgage servicers, which handle billing, collections and foreclosures.

http://makinghomeaffordable.gov/pr_05172010.html