Quantcast
Home / Government / Obama administration expands housing plan

Obama administration expands housing plan

Treasury Secretary Timothy Geithner (left) grins after listening to Nicholas Tekperety (foreground) of Reston, Va., on Thursday in Washington, D.C., share his experiences with participating in the Home Affordable Modification program.  AP Photo by Haraz N. Ghanbari

Treasury Secretary Timothy Geithner (left) grins after listening to Nicholas Tekperety (foreground) of Reston, Va., on Thursday in Washington, D.C., share his experiences with participating in the Home Affordable Modification program. AP Photo by Haraz N. Ghanbari

Alan Zibel
AP Real Estate Writer

Washington — The Obama administration expanded its $50 billion mortgage aid program Thursday, announcing new measures to help homeowners avoid foreclosure if they do not qualify for other assistance.

The new initiatives are expected to streamline the process of selling a home that is worth less than the mortgage or transferring ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure would.

Since the program, called Making Home Affordable, was launched in March, mortgage companies have made more than 55,000 offers to modify borrowers’ loans.

“We’re seeing the first signs of homeowners being able to take advantage of lower monthly payments that the program makes possible,” said Treasury Secretary Timothy Geithner.

While the number of success stories is growing, it pales compared to the rate of new foreclosures, and many housing counselors across the country are complaining Making Home Affordable is taking off slowly.

“Our experience at the ground level has been, so far, frustrating,” said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.

There are, of course, lucky homeowners such as Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga got JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.

He’s going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.

“It’s a long process, but I still have a little hope to stay in my home,” said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. “I’m pretty happy.”

The government program, unlike others before it, requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.

So far, 14 companies that service about three quarters of the mortgage market have signed up and will be paid for each loan they modify.

Since the program involves taxpayer dollars, “you want the rigor,” said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. “This is a very well-thought out plan,” she said. “People have to be a little bit patient.”

But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclose Friday on her home overlooking Seattle’s Puget Sound.

Inman, 58, has lost two jobs, one with a manufacturing company and the other with the city of Seattle. Since then, she’s been working as a human resources consultant, but making much less money.

Despite numerous calls, e-mails and letters, she said, she’s only been able to have one phone conversation with a company representative.

“It’s like this huge, concrete, thick wall that you cannot get through,” she said.

Last week, Aurora joined the Obama administration’s loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers’ home loans.

The Obama administration acknowledges not every borrower who is behind on their loans will qualify for a modification. Officials estimate up to 4 million borrowers will get their loans modified, but housing professionals such as Mark Zandi of Moody’s Economy.com expect the number will be less than half that.

Leave a Reply

Your email address will not be published. Required fields are marked *

*