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.
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The Treasury Department and Department of Housing and Urban Development has announced a plan to help borrowers convert to permanent loan modifications. As expected, the announcement emphasized the importance of ushering borrowers currently in trial modifications into permanent modifications. Phyllis Caldwell, chief of the Treasury Department’s Homeownership Preservation Office, said in a press release that with the success of the trial modification program, agency officials will aim to augment the permanent modification plans. “We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones,” Caldwell said. The plan would involve applying more pressure on banks to convert trial modifications into permanent ones. It’s a task that has proved tricky — while over 650,000 borrowers have qualified for trial modifications under the Treasury’s program Making Home Affordable only 375,000 of those are expected to transition to permanent modifications by the end of 2009. The Treasury plans to disclose how many permanent modifications each bank implements, according to Michael Barr, assistant secretary for financial institutions, a move intended to call out those banks that aren’t performing adequately. “We’re going to be quite focused and direct on particular institutions that are not doing a good job,” Barr said. “Some firms ought to be embarrassed, and they will be.” TRD