Sixty percent of delinquent homeowners are not in any program to avoid foreclosure, according to the State Foreclosure Prevention Working Group, which is made up of attorneys general and state banking commissioners.
The state attorneys said that the 60 percent are seriously delinquent, but they are not getting help from mitigation programs, like the Home Affordable Modification Program and state mediation initiatives.
According to Washington State Attorney General Rob McKenna, co-chairperson of the group, foreclosures will continue to accelerate this year because distressed homeowners are not getting help from prevention programs.
According to a report recently released by the U.S. Treasury, only 7 percent of homeowners who had their mortgages modified under HAMP last year were able to enter permanent modification status.
The report also said that mortgage servicers and lenders have been slow in processing and completing modifications, taking up more than 6 months on the average to complete one modification. A huge majority of modified mortgages are still on the trial stage several months after their modification.
A trend described in the report is the increase in prime mortgages defaulting, based on figures from 13 mortgage servicers. Delinquencies are no longer concentrated on exotic or poorly underwritten loans; they are now spread out to all types of home loans.
The attorneys general have called on mortgage servicers to suspend foreclosure filings on all homeowners involved in HAMP or in mediation programs to help them avoid foreclosure. They further asked that their loan modification programs should reduce principal amounts in areas where there are overwhelming declines in home values to make modifications viable.
They state attorneys also called on the Obama administration to improve HAMP, increase its transparency and reduce the required paperwork to help more distressed homeowners.
A large number of troubled homeowners have been complaining that they are not getting any attention from banks. Joel Bienvenu of Boca Raton, Florida said that he has been applying for loan modification through his lender Wells Fargo since the middle of last year, but he said he keeps getting excuses from bank personnel.
Nationwide, of the over 3.3 million delinquent mortgage loans, only 66,465 modified mortgages have entered permanent modification status and that another 46,056 modifications have been moved on to permanent status by lenders but not yet accepted by borrowers, according to the report.
According to housing analysts, the nationwide program to help homeowners avoid foreclosure is not working because of high unemployment rates and sharp declines in home values.