Foreclosure filings are continuing on a slow drumbeat to an estimated 10 to 12 million. In order to outpace the rate of foreclosures, obligatory homeownership preservation programs must be extended to lenders beyond those who choose to or are required to participate in HAMP. A new bill in the Senate proposes programs that would require all lenders to take more action against foreclosure.
However, it will be difficult to predict the success of HAMP loans, which promote affordability by reducing monthly payments down to 31% of the borrower’s income, because many homeowners at risk of foreclosure do not receive needed counseling and have trouble making and maintaining connections to mortgage servicers.
Sixteen lenders, as well as 2,300 participants with Fannie Mae- and Freddie Mac-insured loans, started modifications for less than the national average of 12% of eligible loans, while only eight lenders modified more than 12% of their eligible loans. Last month, thirteen lenders modified fewer loans than the national average, while seven lenders modified more loans than the national average.
However, these interventions will only have a long-term effect if homeowners are able to take advantage of the extra time to seek out HUD-certified housing counselors—and more resources are made available to these counselors so they can meet the increasing demand for their services.
Here at Woodstock Institute, we’re tracking the mortgage lenders active in the Chicago area to see how they’re performing on their commitment to reducing monthly payments for distressed homeowners. Check back here every month to see who’s getting better—or worse.
Here are the results for performance through July 2009: