USA Today
written by Stephanie Armour
Thursday April 15, 2010
Home foreclosures are accelerating — and many more people are losing their homes — more than a year after the government launched a program to aid financially distressed borrowers.
Foreclosure filings in March totaled 367,056, jumping nearly 19% from February and up almost 8% from March 2009, according to RealtyTrac.
It was the highest monthly total since January 2005, when RealtyTrac began issuing its reports.
Nearly 260,000 properties were repossessed by lenders in the first quarter — a record for any quarter, and a 35% increase from a year earlier, RealtyTrac said.
"We're at the highest record levels ever," says Rick Sharga at RealtyTrac. "We're now seeing the banks financially address the logjams of homes in the foreclosure process that were delayed. And they're addressing the first waves of homes that weren't eligible for the modification process or fell out of the program."
More than a year after the Obama administration launched its foreclosure prevention program, about 230,000 homeowners have gotten permanent modifications with lower monthly mortgage payments, according to a report Wednesday by the Treasury Department.
That represents 6% of the 3.39 million eligible homeowners who are 60 or more days delinquent on their mortgage. An additional 108,000 permanent modifications have been offered to homeowners and were still pending as of the end of March.
More than 1.4 million homeowners received offers for trial modifications, which typically last for three months. If a homeowner remains current on payments during that time, the modifications will generally become permanent.
"(The effort) is improving, but I've always thought this is a Band-Aid program," says Dean Baker, co-director of the Center for Economic and Policy Research. "We're helping people stay in their homes, but they bought homes that cost so much, they may be paying more than renting. And in three to four years from now, they will still be underwater."
Meanwhile, the Obama administration's efforts to prevent foreclosures continues to come under sharp criticism.
The Home Affordable Modification Program (HAMP) is lagging well behind the pace of the crisis, and most homeowners in financial trouble will never receive help, according to a report this week by a congressional oversight panel.
For every borrower who avoided foreclosure through the federal program last year, another 10 families lost their homes, that report said.
Lenders who are participating in the HAMP program say it doesn't capture the full picture, since many modifications are being done for homeowners under programs run by servicers other than HAMP.
Wells Fargo says it has done more than 520,000 modifications this year for homeowners, about 145,000 of them HAMP modifications, which require applicants to meet certain criteria.
Borrowers must have a monthly housing-expense-to-income ratio that exceeds 31% of their gross monthly income, for example.
"The industry is doing a lot of work outside of HAMP," says Mike Heid, Wells Fargo Home Mortgage co-president.
Bank of America has 26% of eligible homeowners who are 60 days or more delinquent in either trial and permanent modifications as of March; 32,900 are in permanent modifications, up more than 12,000 from February.
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