12 percent participation rate raises doubts over foreclosure prevention plan

The Obama administration’s mortgage foreclosure prevention program hasn’t caught on as some had hoped, according to a treasury department report released yesterday. Recent data shows that only 12 percent of eligible borrowers have begun trial loan modifications under the $75 billion plan. Concern over the program’s efficacy is mounting in the wake of this report, with some analysts raising doubts over whether the preventive measures will be enough to slow foreclosure rates. Even worse, Bob Caruso, Lender Processing Service’s executive vice president for strategy, said that many of those trial modifications might not be enough to rework troubled mortgages. “I think they will be lucky to get 50 percent [of the trial modifications] to turn into real modifications,” Caruso said.