Dropout Rate Surging in Taxpayer-Funded Mortgage Fix Program

MakingHomeAffordable.govThe Obama Administration’s mortgage modification program is seeing an increasing dropout rate, with 96,025 additional cancellations out of payment-reduction trials reported for July – that leaves about 52 percent of the 1.3 million targed borrowers in either trials or approved status.
In July, the total number of cancellations out of trials in the Home Affordable Modification Program jumped 18 percent, while the number of approved permanent modifications increased 8 percent to 255,934.
Total cancellations through July out of trials are at 616,839 in the taxpayer-funded program that gives incentives to mortgager servicing companies to reduce the monthly payment of those facing foreclosure. Another 12,912 have dropped out of permanent modifications after having made it through the trial phase.
HAMP launched in April 2009, but it has repeatedly come under fire by Congressionally-appointed watchdogs, borrower advocates, Republicans and those in the mortgage industry for failing to stem the tide of “underwater mortgages.”  The watchdog over the bailout program that funds HAMP said administrators should require more mortgage servicers to reduce loan principals to improve the program’s effectiveness.
HAMP has also been plagued by paperwork delays and a sluggish economic recovery with persistently high unemployment that fuels the modification trial cancellations. Homeowners are eight falling deeper into debt or not having sufficient income, while others fail to comply with documentation and other requirements.
“While the pace of program entry has slowed due to upfront documentation requirements in place since June 1, this policy change streamlines the process to help more eligible homeowners convert to a permanent modification,” the U.S. Treasury said in a statement Friday.
Treasury officials also gave the following “August Housing Scorecard” key data on the health of the housing market:

  • Stabilizing housing prices drive improving expectations in some regions. After 30 straight months of decline, home prices have leveled off in the past year; futures indices have shifted upward since January 2009 as signs of recovery continue, although overall housing outlook measures remain mixed.
  • More than twice as many modification arrangements begun compared to foreclosure completions. More than 3.15 million modification arrangements were done from April 2009 through the end of June 2010.  This includes more than 1.3 million trial Home Affordable Modification Program (HAMP) modifications started, over 472,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and 1.4 million proprietary modifications under HOPE Now. The number of agreements offered continues to more than double foreclosure completions for the same period (1.24 million).
  • More than 4.2 million families have benefited from housing counseling since April 2009. Working with a HUD-approved housing counselor can help borrowers manage debts apart from a mortgage – car payments, credit cards and personal loans, for example – and help them avoid falling into default.

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3 thoughts on “Dropout Rate Surging in Taxpayer-Funded Mortgage Fix Program

  • August 21, 2010 at 5:01 pm
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    Wells Fargo even forecloses home based on hugely inflated appraisal and fraudulent loan.
    Wells Fargo committed prosecutable crime against us. We lost our home. Something is wrong with this picture. Here are the facts.
    1. it is illegal for Wells Fargo to make mortgage loan to us based on hugely inflated appraisal.
    Fact: – Wells Fargo’s fraudulent appraisal valued our home at $718,000
    – Wells Fargo’s own review appraisal valued our home at $475,000
    – Nevada Attorney General’s office suspended the appraiser’s license for committing appraisal fraud on our home.
    – Nevada Appraiser Licensing Board mandated the appraiser to complete appraisal fraud course before regaining his real estate appraiser license.
    – Nevada Revised Statue NRS 205.372 states that it’s category C felony to make mortgage loans based on fraudulent appraisal.
    – Cases of Attorney General’s indictments against attorneys, loan brokers for teaming up make fraudulent loans to defraud homeowners.
    2. it is illegal for Wells Fargo to wrongfully foreclose our home based on fraudulent appraisal and mortgage loan.
    You can find all the facts on our website. http://www.wellsfargomortgagefraud.com.

  • August 21, 2010 at 8:39 pm
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    Hello,
    I have probably uncovered one of the biggest scams in the history of scams. The HAMP Program is NOT a failure, and anyone who thinks it is, is most likely a part of the scam. I don’t know who these “watchdogs” are, but I think THEY may need to be investigated also.
    I was approved for a permanent modification under the HAMP Program by Wells Fargo back in May. All of the trial payments were made on time and the final modification was accepted, both by phone, and by mail.
    Of course now, even after I made my first newly-modified payment in July, they’re saying that they never received the final papers back in May.
    I’ve called every other day. I’m always transferred to the Loss Mitigation Dept. I now realize that I’ve been a part of a high level cat and mouse game of fraud. They put you on a trial modification because I guess by law, they’re required to do so. Then they find ANY reason in the world to not give it to you. In the meantime the state foreclosure authorities contact you and you receive threatening and harassing calls from the mortgage company.
    I realized that either I was crazy, or EVERYONE I was transferred to in the past three months was in on the scam.
    I have gone online and found that THOUSANDS of people have gone through the SAME thing that I have gone through.
    I have come to the conclusion that these mortgage companies have received all of this stimulus money and have NO intentions of approving hardly anyone for permanent modifications. It seems that the lucky ones who ARE approved have only been approved AFTER they filed suit against their mortgage company.
    In conclusion, this is a very dangerous game that these companies are playing, but I really don’t feel that they’re the driving force behind all of this fraudulent activity. After reading thousands and thousands of blogs, I have finally realized that this is ultimately a plot to discredit President Obama’s program.
    Thanks!

  • August 23, 2010 at 9:58 am
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    Housing can get back to its normal level (prices in 2003-2004) if the current adminsitration does what Bill Gross suggested (bring down the mortgage rate of all the home owners who are current on their payments to 4%). This will reduce the amount of short sales and foreclosures in the near future and also increase the spending power. This is the only and best option to stabilize and bring up the economy.

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