Those who doubted in the power of President Obama’s plan to relieve struggling homeowners should take note: the Treasury proudly announced today that half a million at-risk mortgages had been turned around under the making Homes Affordable mortgage modification plan. The plan works by lowering mortgages payments for homeowners who are at a risk for default and foreclosure because they are having trouble meeting their monthly mortgage obligation. Timothy F. Geithner, Treasury secretary, proudly announced that at present home mortgages are being modified more quickly than troubled mortgages are being foreclosed upon, an “important shift.” He stated that forty percent of homeowners deemed eligible for participation in the MHA program decided to move forward with the modifications.
Even though the program got off to a rough start, this milestone seems to be ample proof that the modification scheme is really starting to gain ground in the uphill battle to save America’s troubled homeowners from disaster. The half-million milestone came three weeks in advance of the Treasury’s previously announced deadline to reach that mark, which was the last day of October.
Despite the great news, the mortgage modification plan is still heavily criticized by many foes. The two biggest complaints about Making Homes Affordable are the many frustrations inherent in the program and the futility of such a measure in the face of millions and millions of defaults that have already occurred and are still going on. Mortgage companies obviously are not fans of the program, and have a habit of misplacing crucial documents despite repeated requests. Homeowners are reporting hours waiting on hold on the phone, inaccurate phone and fax numbers being given out, and contradictory instructions from federal agencies and loan officers with whom they are dealing. Since the program kicked off at the start of the summer, massive amounts of complaints about nasty treatment of consumers by mortgage companies have taken place. Some experts have accused mortgage companies of profiting off delays in the modification process and milking homeowners during the drawn-out delinquency process during which they can charge many fees. Mortgage lenders, for their part, say that investors technically own the loans and that they cannot modify any contracts on their own steam.
Geithner acknowledged that the program still needed work to continue improving its effectiveness for homeowners, and that there are still consumers losing “homes they could otherwise afford to stay in.” The economy continues to be rough on homeowning individuals and families: the unemployment rate hovered just below ten percent throughout September, and is predicted to hit the double-digits officially by the end of this month. Mortgages that never would have even been considered a risk during better times are now spiraling down into delinquency and default due to the joblessness of once-prime homeowners. It used to be just consumers with poor credit falling victim to this crisis; now the burden is being shared across the full spectrum of creditworthiness. Hopefully things will continue to keep looking up for the Making Homes Affordable program so more and more families can be spared the heartbreak of homelessness due to mortgage payments they are having trouble keeping up with.
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