A Fourth of the Borrowers are Lagging behind in Foreclosure Prevention Steps

Delinquencies are causing worry as a fourth of the borrowers are lagging behind in foreclosure prevention steps as per government figures. It is posing new queries about the effectiveness of the federal measures.

The figures indicate the latest problems in implementing of programme – Making Home Affordable. Recently officials of the Treasury said that new pressure would be place on the lenders to be more proactive in helping the besieged homeowners in reducing their mortgage payments.

As yet 650,000 homeowners with mortgages have been enlisted in the trial stage of the measure. This has led to the decreasing of their monthly mortgage commitments to about 40% on an average. But a survey recently conducted on a good number of mortgage servicers show that 25% of those participating in the plan were failing behind in their trial schedule.

The latest hurdle the programme is facing is the shifting of the borrowers from the trial to the permanent stage. The borrowers are expected to make three running payments and then submit their papers to prove their eligibility for the plan. But a bottleneck is preventing the forward march of the programme. In a recent conference JPMorgan Chase noted that 22% of the 178,000 borrowers that had enrolled for the plan had not made even their initial payment.

The opinion of the experts is that unless the borrowers keep abreast of their modified mortgage payments there will be no positive impact on the housing crisis. Richard Neiman the superintendent of banks of New York and a member of Congressional Oversight Panel said that he was disappointed. He said, “I am concerned that a quarter of trial mods are not current.”

Many borrowers have complained that the process has confused them and do not know how the new schedule of payment is being chalked out and when they should start paying. Neiman observed that the tardy progress shows the financial instability of the borrowers that has increased since the programme made its debut.

Andrew Jakabovis of Center for American Progress said, “If the borrower qualified under that reduced income but then subsequently lost the job entirely, they are more likely to fall behind on the payments. Unfortunately, the program doesn’t allow for a second bite at the apple.”

Representatives of the government and the mortgage industry however say that the time is not yet ripe to evaluate the success or failure of the programme. Moreover it was unrealistic to hope that all the borrowers would be able to avail of the help.

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