Home Affordable Modification Program

WASHINGTON - House Republicans pushed through legislation Tuesday to terminate an underachieving Obama administration program designed to reduce mortgage payments for homeowners in danger of losing their homes to foreclosure. Most Democrats, while acknowledging that the Home Affordable Modification Program had fallen short of original goals, protested the vote to kill it. The White House, in a statement, said that if the bill ever reaches President Obama's desk, his senior advisers would recommend that he veto it. The House vote was 252-170.

More than a half-million homeowners have been offered a chance to modify their mortgages to lower interest rates since February's launch of Obama administration efforts to reduce foreclosures nationwide. Yet in testimony yesterday before a subcommittee of the House Financial Services Committee, Assistant Treasury Secretary Michael Barr indicated that the Home Affordable Modification Program, though more successful than previous steps, still had problems. A continuing issue, Barr said, is the failure of some of the 45 loan servicers in voluntary compliance with the program to convert offers of trial modification into the real thing.

Criticized for its "ready, fire, aim" approach to reducing foreclosures through voluntary mortgage modification, the Obama administration announced plans yesterday to more actively help homeowners who are unemployed or owe more than their houses are worth. Under the rules that previously governed the Home Affordable Modification Program, unemployed homeowners could not qualify for mortgage assistance. As outlined by the Treasury Department, the "enhancements," to be funded by $50 billion from the Troubled Asset Relief Program, include these changes: Instead of lowering interest rates or extending loan maturities, or both, to reduce monthly mortgage payments to 31 percent of household income, lenders would gradually lower the principal if homeowners remained current on their payments.

The Obama administration said Thursday that it was withholding financial incentives from three home-loan servicers needing to substantially improve their performances in the government's mortgage-modification program. The three are Bank of America, JPMorgan Chase, and Wells Fargo, according to the Treasury Department, which oversees the Home Affordable Modification Program. Treasury's review of first-quarter performance by lenders that participate in the voluntary program also cited Ocwen Financial as needing substantial improvement.

Relatively few troubled borrowers are having their mortgage payments permanently reduced under the Obama administration's year-old Home Affordable Modification Program, data for January released yesterday by the Treasury Department show. Of the 1.3 million "trial" modifications started under the program since February 2009, just 116,000 have been made permanent. Still, the number of permanent modifications has increased substantially since December, when just 65,000 were reported.

Foreclosure filings in August dipped less than 1 percent from July but were 18 percent above August 2008 numbers, RealtyTrac of Irvine, Calif., reported yesterday. As has been the case for most of the three-year-old housing downturn, most of the filings - 60 percent of the total - were in Florida, California, Nevada, Arizona, and the upper Midwest. Pennsylvania and New Jersey had filing increases, though both states remained below the national average. Pennsylvania's foreclosure rate was one in every 950 houses; New Jersey's was one in every 421. The U.S. rate was one in 357. No. 1 Nevada's rate was one in every 62 houses.

LAST WEEK, the Congressional Oversight Panel held a hearing here in Philadelphia on how well a new federal program is working to slow down the rate of foreclosures. The answer: not so much. According to the testimony, and to observations offered by the panel, the Home Affordable Modification Program (HAMP) has real problems. HAMP provides financial incentives to lenders to work out mortgages, but while there have been nearly 400,000 trial modifications to date, those testifying on behalf of homeowners say there are enough problems with the program that they will be unable to handle the nine million foreclosures projected to come over the next three years.

The House voted Friday, 242-177, to cancel $1 billion approved last year for a program designed to provide zero-interest loans for unemployed homeowners facing foreclosure. The cancellation bill was one of four approved in the last 10 days by the House Financial Services Committee to dismantle Obama administration efforts to reduce the effects of record foreclosures after the housing-market collapse in 2007 and 2008. Republicans on the committee, led by chairman Spencer Bachus of Alabama, consider the $30 billion price tag for the programs too high and the efforts themselves ineffective.

February witnessed the lowest year-over-year increase in foreclosure filings since January 2006, RealtyTrac Inc., of Irvine, Calif., reported yesterday. Filings also fell 2 percent from January, RealtyTrac said. Two major snowstorms that struck the Northeast in the first two weeks of February might have contributed to the monthly drop as well as the small year-over-year increase. "Severe winter weather appears to have temporarily slowed the processing of foreclosure records in some Northeastern and Mid-Atlantic states," said James J. Saccacio, RealtyTrac chief executive officer.

The government cannot do anything to make Rafael Aponte's home affordable. Aponte has been unemployed for three years since being laid off after 17 years at National Display Co. That is how long he has owned his Northern Liberties rowhouse, now in foreclosure. Protesting near the National Constitution Center, where a congressional panel yesterday tried to gauge the progress of homeowner-rescue programs, Aponte said his lender had agreed to modify his mortgage, then had withdrawn the offer.

Sally Spencer walked into the John F. Kennedy Center in Willingboro hoping for a miracle. The single mother of two works full time and cares for her 16-year-old autistic son, Salvatore. Her monthly income is $1,400, but her mortgage is $1,700. "I'm underwater," she said, waiting for a private meeting with an officer from HSBC, her lender. Spencer, 44, refinanced the mortgage on her home in Lindenwold in 2006 because she needed money to bury her mother, who had died from breast cancer.

I hear these things from any number of readers regularly, but foreclosure lawyer Bruce Shaw seems to articulate them better than most. He asks: What's more difficult to win than the Powerball lottery? Answer: A mortgage modification. Shaw, who practices in Pennsylvania and New Jersey, said he had just finished his fourth conference for a home-loan modification with a mortgage company, a process that has spanned eight months. "Of course, nothing was settled," he said.

A few weeks back, Ira Goldstein of the Reinvestment Fund produced a study of the Philadelphia Common Pleas Court's three-year-old mortgage-foreclosure diversion program. The program debuted as a pilot project in April 2008, as foreclosure filings citywide climbed to 8,200 a year. Since then, 16,000 homeowners, accompanied by approved pro bono counselors and lawyers, have sat down with their lenders to come to agreement on keeping their houses. The success rate has been, to use the word employed by the experts I have asked, remarkable.

An independent study has concluded that Philadelphia's three-year-old foreclosure-diversion program has significantly improved the chances for homeowners in default on their mortgages to remain in the properties. Not only that, the study found, but the Common Pleas Court program also has provided help in an "equitable manner," with lower-income and minority homeowners reaching agreements with lenders at similar rates to higher-income, nonminority Philadelphians. Results of the study were released Tuesday.

The Obama administration said Thursday that it was withholding financial incentives from three home-loan servicers needing to substantially improve their performances in the government's mortgage-modification program. The three are Bank of America, JPMorgan Chase, and Wells Fargo, according to the Treasury Department, which oversees the Home Affordable Modification Program. Treasury's review of first-quarter performance by lenders that participate in the voluntary program also cited Ocwen Financial as needing substantial improvement.

WASHINGTON - House Republicans pushed through legislation Tuesday to terminate an underachieving Obama administration program designed to reduce mortgage payments for homeowners in danger of losing their homes to foreclosure. Most Democrats, while acknowledging that the Home Affordable Modification Program had fallen short of original goals, protested the vote to kill it. The White House, in a statement, said that if the bill ever reaches President Obama's desk, his senior advisers would recommend that he veto it. The House vote was 252-170.

The House voted Friday, 242-177, to cancel $1 billion approved last year for a program designed to provide zero-interest loans for unemployed homeowners facing foreclosure. The cancellation bill was one of four approved in the last 10 days by the House Financial Services Committee to dismantle Obama administration efforts to reduce the effects of record foreclosures after the housing-market collapse in 2007 and 2008. Republicans on the committee, led by chairman Spencer Bachus of Alabama, consider the $30 billion price tag for the programs too high and the efforts themselves ineffective.

It is called the "principal reduction initiative," an effort to forestall foreclosure by reducing the mortgage balance on houses that aren't worth as much as is owed. The intent was to keep people in their houses, something that the government, with its emphasis on voluntary lender and servicer participation in its Home Affordable Modification Program (HAMP) or Home Affordable Refinancing Program (HARP), has been unable to do on the scale originally anticipated. The HAMP plan was expected to ultimately help between two million and three million homeowners avert foreclosure through loan modification, and the HARP plan was expected to spur four million to five million refinancings by homeowners with little or negative equity.