Stopping the foreclosure process for 500,000 homeowners by November 1 this year was the goal set by the Obama administration last July, and according to Obama officials, the administration achieved this goal more than two weeks early.
Federal officials said that 500,000 distressed borrowers were put into a three-month trial loan modification program by mortgage lenders and servicers. They also said that lenders had modified the mortgage loans of 16 percent of qualified borrowers who were at least two months in default as of September 30, pushing up the percentage from 12 percent in August.
Housing advocates appreciate the efforts of the Obama administration in pressuring lenders, but they reiterate that the federal government needs to do more for homeowners. Barry Zigas, housing policy director at the Consumer Federation of America, said that the Home Affordable Modification Program is only helping a few compared to the record number of homeowners losing their homes to foreclosure.
Among the mortgage servicers, Saxon Mortgage Services again modified the highest percentage, stopping the foreclosure process for 41 percent of its qualified borrowers.
Citigroup and Aurora Loan Servicers came in second, both with 33-percent of clients. JPMorgan Chase modified 27 percent of qualified loans while Wells Fargo and Bank of America modified 20 percent and 11 percent of qualified mortgages, respectively.
According to the U.S. Treasury, several servicers with low modification percentages in July and August made significant progress in their efforts in September. Wells Fargo modified only 6 percent of qualified borrowers in July. In September, it modified 20 percent, much higher than the modification rate by Bank of America.
Citi Mortgage has modified 33 percent of distressed home loans, a substantial increase from the 23 percent it modified in August.
Similarly, Aurora Loan Services increased its 22-percent performance in August to 33 percent in September. Despite its problems related to its ownership by failed Lehman Brothers, Aurora Loan made efforts to help almost 24,000 distressed borrowers in September.
Wells Fargo modified nearly 63,000 home loans in September, nearly double its reported modification of only around 33,000 in August. Its modification rate has increased from 11 percent in August to 20 percent in September.
Wachovia’s mortgage servicer, which was acquired by Wells Fargo in 2008, had the lowest modification rate. The servicer explained that stopping the foreclosure process for its clients is difficult because most of its borrowers took out option adjustable rate mortgage loans.