Friday, March 12, 2010
Just a few hours after the Washington Post said there are between five and seven million homeowners barreling toward foreclosure (as noted here earlier), Reuters reports that one million American homeowners are in one stage or another of having their troubled mortgage modified as part of Washington's rescue plan.
The report said there were 1,003,902 active loan modifications through February and 168,708 of those have been made permanent. That was up from 946,735 active loan modifications and 116,297 permanent loan modifications through January.A wider used of principal write-downs (otherwise known as cram-downs) is probably on the way and there still seem to be big problems with second liens on homes (once fondly referred to as those "housing ATM cards").
The Treasury said it still hopes to help 3 to 4 million homeowners by 2012 under the $75 billion program. There are roughly 6.0 million borrowers more than 60 days behind on their payments but not all of them are eligible for the Home Affordable Modification Program (HAMP). Treasury said it expects the number of eligible borrowers to increase.
Most loan modifications result in lower monthly payments, although some lead to reduced principal on mortgages. Trial modifications were initially for three months, but the Treasury added 60 days, effectively making them last five months.