170,000 Get Mortgage Modifications Under Foreclosure Prevention Program

Government’s foreclosure prevention program has been successful in providing permanent aid in the form of mortgage modifications to 170,000 distressed home owners. Another 91,800 homeowners’ permanent modification applications have been approved by lenders and will come in effect upon the borrower’s acceptance. This will up the tally of total number of people receiving permanent aids under the program to more than 250,000.

The administration has been putting pressure on mortgage lenders to hasten the pace of relief and process the applicants faster. The pace of the program has so far been slow and there are a number of people who are awaiting word on their cases. Many have also got rejection notices as their trial periods have ended. The percentage of people who have applied and got relief under the program has risen to 15.5% from 11.5% last month. But several experts feel that more needs to be done, as this may not be enough to hold off the impending crisis of a glut of foreclosed houses in the market, which will lead to further fall in the real estate prices.

Currently around 830,000 people have enrolled in the foreclosure prevention program and are awaiting word on their eligibility. If found eligible, the mortgage modification would bring down their monthly loan payments down to 31% of their pre tax income, which will allow home owners the much needed breathing space to get back on track.

The modification assistance program was announced in February 2009 with a target of preventing four million households from facing foreclosure. However, the target has been revised more recently to qualification of four million homeowners under the program. This has not been very well received by the advocates of the housing industry.

Another fear expressed by many experts is that the slow pace of the program administration has been artificially pulling down the numbers of foreclosures. The numbers of distressed homes may be much more and as applications under the program get processed, the true picture that evolves may not be very optimistic.

On a positive note, Obama administration is planning more initiatives aimed towards rolling out aid for the distressed homeowners. Among them is the recently announced 1.5 billion dollar program, which will be rolled out in the five badly affected states. This new program will help those who are out of jobs and without income, and owe more than the actual value of their home in debt. These are the people who can not avail relief under the mortgage modification program.

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