The Obama administration Friday said its mortgage modification program continued to make progress, with the number of homeowners receiving permanently reduced monthly payments in February increasing by 45% to 168,708.
An additional 91,483 three-month trial modifications have been approved by the companies servicing the mortgages and were awaiting acceptance by the borrowers, the Treasury Department reported. While the numbers continue a steady increase in recent months, only about 15% of homeowners who have started trial modifications have had them made permanent.
The $75-billion Home Affordable Modification Program was launched last year to ease the foreclosure crisis by providing cash incentives to mortgage companies to lower payments for homeowners who were 60 days or more behind on their loans. The goal is to modify 3 million to 4 million mortgages through 2012.
The program began slowly, particularly in converting temporary modifications into permanently lowered payments. In December, Obama administration officials began aggressively pushing banks and other mortgage servicers to make more of the modifications permanent. At the end of November, there were just 31,424 permanent modifications.
But as the number of permanent modifications has increased, the pace of new trial modifications under the program has slowed, according to the report. There were 835,194 active trial modifications in February, compared with 830,438 in January. The median payment for permanent modification is 36% lower than before the modification, with a savings of more than $500 each month, the Treasury Department said.
The Los Angeles- Orange County area had 5.9% of all the program's trial and permanent modifications, second only to the New York City area's 6.1%. The Inland Empire was tied for fourth with 4.7% of the activity.