Foreclosed Home Prevention Program Helped Over 185,000
A total of 185,156 home loans got modified in the first quarter this year under the Obama administration’s foreclosed home prevention program, according to a report released by the Office of Thrift Supervision and Office of the Comptroller of the Currency.
The total for the first quarter represented an improvement of 55 percent compared to the last quarter of 2008 and a significant increase of 172 percent compared to the first quarter in 2008.
Over 50 percent of the loan modifications reduced monthly interest and principal payments and over 29 percent reduced monthly payments to at least 20 percent lower than their original levels.
The two federal finance agencies tracked 24 million home loans worth over $6 trillion to check their status in relation to the federal foreclosed home prevention program.
John C. Dugan, Comptroller of the Currency, said that the continued growth of foreclosure inventories worried him, but he said he is encouraged by the change in attitude in many lenders and servicers. Many of these lenders, according to Dugan, have been reducing monthly loan payments to sustainable levels.
JPMorgan Chase announced that it had processed 87,100 loan modifications under the government’s foreclosed home prevention program since April and that another 50,900 modification applications have been approved under the bank’s own modification program because they were not qualified under the government program.
Charlie Scharf, retail financial services director for JPMorgan Chase, said that the bank will be able to step up its loan modification activities because it has made improvements in its systems to handle the significant increase in customer demand.
In the meantime, Goldman Sachs released a statement to respond to protests against its subsidiary Litton Loan Services. Protesters claimed that Litton Loan has not signed to participate in the federal foreclosed home prevention program despite the provision of around $10 billion in taxpayer money to bail out its parent firm Goldman Sachs.
Goldman Sachs stated that Litton Loan has modified over 40,000 home loans in 2008, which represent around 10 percent of its total home loans. Goldman also claimed that Litton provided over 25,000 trial loan modifications under the Obama administration’s foreclosed home prevention program.
In response to clamor for more help, President Obama again launched another effort to make its foreclosed home prevention program more effective. The new initiative empowers local housing advocates to reach out to more troubled homeowners in foreclosure-battered cities such as Las Vegas, Miami, Los Angeles, Boston, Sacramento and Phoenix.
