The Obama administration today announced a renewed push to get lenders to convert hundreds of thousands of temporarily restructured mortgages into permanent ones to help keep struggling homeowners from falling into foreclosure.
The changes include a requirement for mortgage lenders and servicers to provide updates to the administration, sometimes daily, about each mortgage being modified, and possible fines and other sanctions for those who do not meet certain performance obligations.
The moves come amid complaints of bureaucratic nightmares from people who have received the short-term reductions in their payments but have been unable to get their lender or servicer to make the changes permanent. The mortgages have been altered under the administration's $75-billion Home Affordable Modification Program, which uses financial incentives to get banks and other mortgage holders to reduce the payments for homeowners who meet certain qualifications.
The program has temporarily modified more than 650,000 mortgages as of Oct. 30, but few of those three-month trials are estimated to have been made permanent. As of Sept. 1, only 1,711 trial modifications had become permanent, according to oversight panel monitoring the $700 billion Troubled Asset Relief Program. TARP money is used to fund the program.
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