Making Home Affordable Program Numbers Appear Lower Than Expected

Once touted by the Obama Administration as a program that would protect 3 million households from foreclosure, the Making Home Affordable Program now appears that it will permanently help about one-sixth of the original estimate.

Numbers released in August show that lenders canceled approximately 96,000 trial modifications, bringing the total number of canceled trial loan modifications to more than 616,000.

In the haste to help troubled borrowers, many lenders enrolled borrowers that did not qualify for the Making Home Affordable Program, which, after a review of enrolled borrowers, explains the high rate of cancellations from the program. (The program now pre-screens borrowers for eligibility.) Borrowers seeking loan modification do not qualify for permanent status for many reasons, including:

  • Not a heavy enough debt load
  • Borrower does not live in the house
  • Incomplete application documents
  • Failed to make trial payments

Even while numbers of trial modifications are being purged by lenders, the Obama Administration notes that though these borrowers do not qualify for permanent modification, many were helped by the temporary relief that they did receive.

According to Herbert M. Allison, an assistant Treasury secretary: "They were able to benefit from reduced mortgage payments each month at no cost to the taxpayers."

The Obama Administration's September Housing Scorecard, recently released by the U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury, indicates that the housing prices are starting to stabilize, which may stem the tide of home foreclosures.

HUD Assistant Secretary Raphael Bostic notes: "Over the last 17 months, the Obama Administration has taken comprehensive action to keep interest rates at record lows, provide incentives to responsible homebuyers, and help millions of families stay in their homes."

So, while the numbers of permanent loan modifications through the Making Home Affordable Program are much lower than expected, the housing numbers indicate that the combined efforts of all the programs introduced and administered by the Obama Administration may be working to stabilize the housing market.