Mortgage Modification Program Off To Slow Start

How the banks are doing. i

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itoggle caption Treasury Department
How the banks are doing.

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Treasury Department

The Obama administration released the first official stats on its $75 billion mortgage modification program this morning. According to the report, 235,250 home loans, or about nine percent of delinquent borrowers, have been put into trial modifications by loan servicing firms participating in the program. Those institutions offered extended modifications to 406,540 delinquent borrowers — about 15 percent of the total.

According to the Center for Responsible Lending, there are about 3.5 million mortgages in serious delinquency right now, and that same report warned that new foreclosure starts and delinquencies are outpacing the modification program, which was announced in February.

We linked to that report last week, along with a New York Times story about mortgage servicers not wanting to alter loans so they could profit off of late fees. As you can see from the above chart, a lot of the lag is coming from the banks — most of which haven't modified even 10 percent of their delinquent mortgages.

But the Obama administration says that they're going to speed up the program's implementation and put more pressure on lenders to modify bad loans — the goal is to modify 500,000 loans by November, and up to four million over the next three years.

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