WASHINGTON — A banking industry group says lenders helped more than 1 million troubled borrowers from July through January, though critics say the response to the mortgage mess has fallen short.
Statistics released Monday by Hope Now, a Bush administration-organized effort to help at-risk borrowers, show that more homeowners are getting assistance. But critics Monday said the industry had not released enough information about what kind of help was being provided and questioned the value of the banks' intervention.
Of the 1 million borrowers who received loan workouts, 73% were helped through repayment plans, which help borrowers get back on track after missing a few payments. The remainder were helped through permanent loan modifications, such as lower interest rates.
The statistics go back through July and include loan modifications made before the Hope Now alliance was set up in October in response to soaring mortgage defaults and home foreclosures.
Consumer advocates say repayment plans are not effective assistance for most and loan delinquencies and foreclosure rates continue to soar.
John Taylor, chief executive of the National Community Reinvestment Coalition, noted that many borrowers aren't able to keep up -- even with modified loans.
"If the end goal is to assist working Americans to avoid foreclosure, then the numbers reported should provide detail on the nature of those loan adjustments," Taylor said in a statement. "Failure to provide real information raises real questions about the success of voluntary efforts."
Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, also said the industry and the Treasury Department had not made enough progress in dealing with the housing crisis. He supports a broader, government-funded effort to buy up troubled loans, while the Bush administration prefers voluntary industry-led efforts.
The Hope Now group "does not have the resources or capacity to deal with the sheer size of the problem that has millions of Americans in financial dire straits," Dodd said in a statement.
Hope Now's statistics show that workouts made up about 36% of total loan modifications in January, up from about 30% in the fourth quarter of 2007.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said she was encouraged by that trend, but "concerned about the reliance on repayment plans which may be unsustainable for borrowers and lead to later delinquencies."
Bair on Monday sent a letter to banks encouraging them to report details of their foreclosure-prevention activities to the Hope Now alliance. The federal Office of Thrift Supervision, the Federal Reserve and other regulators have issued similar requests.
Members of Hope Now include Bank of America Corp., Citigroup Inc., Washington Mutual Inc. and Wells Fargo & Co.
So far, the effort has reached about 638,000 sub-prime borrowers with poor credit, or about 9% of the 7.1 million sub-prime loans that were outstanding as of last fall. In December, it had reached 8% of those borrowers. Among sub-prime borrowers, about 70% received repayment plans, while 30% had loans modified.
In related news, a survey of mortgage counseling agencies released Monday found that efforts by mortgage lenders to negotiate new loan terms for borrowers at risk of foreclosure are falling short in California.
The California Reinvestment Coalition, a group of nonprofit organizations and public agencies that advocate for the poor and minorities, surveyed 38 of about 80 independent, federally certified counseling agencies in the state.
The coalition said the results suggested that the mortgage industry hadn't helped borrowers avoid foreclosure "to any significant degree."