FreeDIYkits Loan Modification Blog

Under President Barack Obama’s program to reduce foreclosures, fewer than 35,000 troubled South Floridians have had their mortgages modified, less than 5 percent of those who qualify for help.

Figures from a U.S. Treasury Department report Thursday offer little good news for the hundreds of thousands of Florida homeowners who are behind on their mortgage payments and seeking help from their lenders.

Banks and companies that service home loans are moving more slowly to renegotiate loans in Florida through the Making Home Affordable program than in the rest of the nation

Nationwide, 24 percent of the nation’s 3.3 million troubled home loans have been modified, the Treasury Department said. In Florida, the rate was 13.5 percent through November.

The Treasury report offered the first look into modifications at the local level. The Miami metro area, including Miami, Fort Lauderdale and Pompano Beach, is No. 4 among large cities with 34,668 loans modified. That represents 4.8 percent of eligible loans.

Modifications under the Making Home Affordable Program are reducing monthly payments by an average of $550 a month, the Treasury Department said.

In a loan modification, the lender typically agrees to cut the interest rate to make the loan more affordable for a limited time to help borrowers who have lost jobs or suffered from the economy’s downturn.

The Making Home Affordable program was launched in February with a goal of helping three million to four million homeowners to get lower mortgage payments.

One out of five of loans eligible for modification under the Making Home Affordable Program is in Florida. The state is the nation’s second busiest for loan modifications under the Obama program. Florida also had the nation’s second highest foreclosure rate in November. In the third quarter, more than 441,000, or almost 13 percent of the state’s mortgages, were in foreclosure.

Few who get loan modifications hang on to their new deals under the Obama program. Nationwide, of the 728,408 loans modified, only 31,382 have become permanent.

The problem: Homeowners have to make timely payments and show that they still qualify for the loan after a three-month trial period ends. Banks say few homeowners make it over both hurdles.

Even if they are making the payments on time, about half do not provide the necessary paperwork to make the loan permanent, according to a statement from JP Morgan Chase, a major lender in Florida. “It has been a struggle,” said Charlie Scharf, head of Retail Financial Services at Chase. A spokesman for Wells Fargo said the lender contacts borrowers 20 times to ask for documents and yet only 40 percent of the trial loans with current payments have their paperwork in order.

Homeowners say the real problem is that lenders are disorganized and difficult to work with.

“I have submitted all the papers three times. I’ve been going through hell, with a promised modification and then the bank said no, really I don’t qualify,” said Claudia LeCompte of Boynton Beach. She said she has been seeking a loan modification since January. Earlier this week, after an inquiry from the Sun Sentinel, her loan servicer HomEq told LeCompte that she will get a trial modification.

“There is such a grand lack of communication between servicers and their clients and their legal departments and even within their own branches,” said Alexander Fernandez, director of homeownership preservation at Neighborhood Housing Services of South Florida, which counsels troubled borrowers. “Also, a lot of servicers don’t have structures” to handle the crush of borrowers.

Major lenders Chase, Bank of America and Wells Fargo say they are restructuring loans at a fast clip through the Making Home Affordable program and other programs. The three major banks issued press releases this week saying they have collectively modified more than 1.3 million home loans nationwide.

But the Treasury Department is pressuring lenders to do more. It cannot force banks or servicers to restructure loans because modifications are voluntary.

South Florida mortgage holders are in trouble. Payments were 90 days or more behind on almost 18 percent of home loans in Palm Beach County in September, including nearly 12 percent of loans in foreclosure, according to the latest figures from First American Core Logic, a real estate analysis firm. In Broward, payments on 21 percent of loans were 90 days late, including 12.5 percent in foreclosure.

In Miami-Dade in October, payments on more than 26 percent of loans were 90 days late, with almost 17 percent of loans in foreclosure.

Payments were 90 days or more behind on almost 18 percent of home loans in Palm Beach County in September, including nearly 12 percent of loans already in foreclosure, according to the latest figures from First American Core Logic, a real estate analysis firm.

In Broward, 21 percent of loans were 90 days late in September, including 12.5 percent in foreclosure. And in October in Miami-Dade, the figures are more than 26 percent of loans 90 days late, including almost 17 percent of loans in foreclosure.

In Florida, there were 667,754 home loans eligible for restructuring under the Making Home Affordable program in October. Statewide, 90,575 have been modified, the Treasury said.

Article Source: Miami Herald