Mortgage modifications see sharp increase - East Valley Tribune: News

Mortgage modifications see sharp increase

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Posted: Tuesday, March 16, 2010 4:37 pm | Updated: 3:42 am, Sat Oct 8, 2011.

The number of permanent mortgage modifications under the federal Making Home Affordable program increased 45 percent nationally and 39.5 percent in Arizona from January to February, according to the latest statistics from the U.S. Department of the Treasury.

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The number of permanent mortgage modifications under the federal Making Home Affordable program increased 45 percent nationally and 39.5 percent in Arizona from January to February, according to the latest statistics from the U.S. Department of the Treasury.

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Foreclosure filings, however, were reported on 308,524 U.S. properties last month, including 16,718 in Arizona, according to RealtyTrac, an online marketplace for foreclosure properties.

The federal Making Home Affordable program, announced in February last year by President Barack Obama at Dobson High School in Mesa, has been widely criticized for not helping enough homeowners avoid foreclosure.

According to the latest statistics, 168,708 permanent modifications were reported nationally since the program began last year through Feb. 31. That's up from 116,297 at the end of January.

"Trial modification starts and conversions to permanent modifications both continued to rise in February, on pace with our goals to provide 3 (million) to 4 million homeowners the opportunity to stay in their homes by 2012," said Meg Reilly, Treasury spokeswoman. "Both trial and permanent modifications have been steadily rising since the start of the program."

However, permanent modifications remain far behind the more than 1 million trial modifications initiated since the program's inception, and more than 88,600 homeowners have dropped out of the program.

Through Feb. 28, 9,763 permanent modifications were reported in Arizona, including 8,118 in the Valley. That's up from 7,000 statewide, including 5,834 in the Valley, as of Jan. 31.

The median savings to borrowers with permanent modifications is more than $500 per month.

An estimated 3.44 million mortgages nationally are at least 60 days delinquent and deemed eligible for the modification program, up from 3.4 million as of Jan. 31.

The mortgage modification program is failing because it hasn't stopped or even slowed the onslaught of foreclosures, said Kevin Hardin, director of the Mortgage Mediation Group at Valley-based law firm Thomson Conant.

"So long as we're breaking even or foreclosures are exceeding modifications, how can we possibly say that (the program) is working?" Hardin said. "I don't care if it said 300,000 (permanent modifications), if foreclosures are also 300,000 in the same time frame, then it can't be a success."

Paul Klimke, vice president of the Arizona Association of Mortgage Brokers, said the latest statistics are encouraging but more needs to be done to help distressed homeowners stay in their homes.

"They need to do more permanent debt reductions," he said. "That's really critical in getting people to not abandon their homes."

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