Borrowers leaving foreclosure-relief program
WASHINGTON — The Obama administration’s flagship mortgage-relief effort is failing to ease the foreclosure crisis as more than half of those who have enrolled have fallen out of the program.
As of August, approximately 680,000 homeowners who applied to get their mortgage payments lowered, or about 51 percent, have been disqualified, the Treasury Department said yesterday. That’s up from about 48 percent in July.
The report gives ammunition to critics who say the program has failed to slow the tide of foreclosures.
“The problem is just so huge in magnitude that there’s no viable solution that can come out of the government to solve it,’’ said Anthony Sanders, a professor at George Mason University.
About 2.5 million homes have been lost to foreclosure since the recession started in December 2007, according to RealtyTrac Inc. And another 3.3 million homes could be lost to foreclosure or distressed sale over the next four years, according to Moody’s Analytics.
The Obama administration had grand hopes for its relief effort in February 2009. At the time, officials said the government could help up to 4 million homeowners. Yet, as of last month, only about 449,000 borrowers have received permanent loan modifications and are making their payments on time. That’s only 34 percent of the 1.3 million who enrolled.
The administration’s effort has been plagued by problems.
Banks weren’t prepared for the volume of calls from borrowers and were slow to process their requests for help.
Obama officials say most borrowers who exit the program are not headed for foreclosure because many ultimately get help from their lenders. Still, they say they are not ruling out expanding or reworking the government’s housing efforts.