Record-low mortgage interest rates helped to further stabilize the housing market over the past month, according to the latest “Housing Scorecard” released by the Obama Administration yesterday. While new and existing home sales stuck at lower levels than those seen prior to the expiration of the homebuyer tax credit, prices have stopped slipping after 33 consecutive months of declines, the report says, and in the second quarter of 2010, U.S. homeowners gained $95 billion worth of home equity. TRD [more]

President Obama’s mortgage modification plan took a hit yesterday, after Treasury Department data revealed at the rate of default on mortgages among homeowners in the program almost doubled in March, according to the New York Times. The defaults came even after homeowners enrolled in the program had received less expensive mortgage terms, as more than 2,800 borrowers holding the modified loans were unable to make payments since the program began last fall. Currently around 7 million households are delinquent in their mortgage payments.

Only 31,382 troubled homeowners have received permanent mortgage modifications through Obama’s federal program, while nearly 30,650 people in trial modifications have been denied as of Nov. 30, according to a recent report released by the U.S. Treasury Department. Since the program launched in the spring, a total of 759,058 trial modifications were started, but only 4 percent of them became permanent ones. “Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications,” said Phyllis Caldwell, chief of the Treasury’s Homeownership Preservation Office. The lack of permanent modifications has created concerns that the $75 billion plan will fall far short of the federal mortgage modification plan introduced this spring to help up to four million delinquent homeowners.

The U.S Treasury Department has released the latest numbers for the Home Affordable Modification Program in its October report. Out of all the major banks, Bank of America has approved the least amount of mortgage modifications, granting mods to only 21 percent of all eligible homeowners, according to the report. CitiMortgage approved the most, offering modifications to 50 percent of eligible homeowners and JPMorgan and Wells Fargo trailed close behind CitiMortgage, offering mortgage modifications to 43 percent and 41 percent of homeowners, respectively. Since the program began in May, there have been 650,994 trial modifications started across the country, with 28,773 active modifications currently in New York state. In October, 163,000 new trial modifications were started, up from 100,000 new trials started a month earlier, according to the report.

Citigroup said it has hired 1,400 employees for its mortgage business
over the past few months to meet the Obama administration’s mortgage
modification goals. The company has also invested in additional
telephone lines and infrastructure to process mortgage modifications.
The company already had about 2,600 employees dedicated to dealing with
late mortgage payments, said Sanjiv Das, CEO of CitiMortgage. The
division now has a staff of about 10,000, the same level it was at last
year before several rounds of job cuts. Banks in the federal Troubled
Asset Relief Program, including Citigroup, are required to participate
in the government’s Home Affordable Modification Program. [more]

The largest U.S. banks have had the most trouble keeping up with demand
for mortgage modifications, according to a Treasury Department report
to be released today. Of the 31 companies participating in the Obama
administration’s loan modification program, Bank of America, Citigroup,
JPMorgan Chase and Wells Fargo will probably have struggled to assist
homeowners, compared to smaller banks that will have had more success,
according to analyst David Sisko, head of default management services
at Deloitte and Touche. There have been about 200,000 trial loan
modifications under the program so far, and the Obama administration
hopes to see at least 500,000 started by November 1. [more]

In a letter sent Thursday to companies participating in the
government’s mortgage modification program, the Obama administration
urged mortgage servicing companies to work faster to modify mortgages.
The program has offered financial incentives to the 25 companies that
have agreed to participate. So far, more than 270,000 borrowers have
been able to modify their mortgages through the program. But the
administration wants the program to help 4 million homeowners. [more]

Despite glimmers of a recovery in the housing sector, chaos theorists
argue that the worst is yet to come. The banks are holding back a
significant number of homes, in order not to overwhelm the market, but
the properties may eventually come up for auction anyway. There are
also reports that some people have stopped paying their mortgages,
contributing to a longer-lasting housing crisis. These homeowners have
stopped payments in the hope of qualifying for mortgage modifications
or out of fear of job losses, according to George W. Mantor, founder
and president of Associates Financial Group, a real estate consulting
firm. With banks and servicing companies already overwhelmed by the
increasing amounts of short sales and defaults, these non-payers are
able to get away with skipping a few mortgage payments. [more]