By Candice Ludlow
http://stream.publicbroadcasting.net/production/mp3/wkno/local-wkno-855373.mp3
Memphis, TN – Government efforts to stall the mortgage meltdown are slow going at best. According to Realty Trac, the pace of foreclosure in Shelby County has remained steady, with just a slight drop from a year ago. Last summer, the HopeNow Alliance started encouraging those facing foreclosure to contact a housing counselor in order to save their homes. But that didn't help much, so the federal government stepped in.
"The lenders are notorious for losing everything," says Ruth Gibson of the Binghamton Community Development Corporation, referring to the paperwork required to get a loan modification. Gibson is a housing counselor and she spends countless hours calling and faxing lenders and servicers to help her clients keep their homes.
In March, the Congressional Oversight Panel found that most of the modifications penned under the HopeNow Alliance have not lowered payments and one in five have re-defaulted. So the Obama administration launched the Making Home Affordable Program to encourage servicers with financial incentives to lower interest rates and write down principal on the troubled loans.
"What we're trying to do is focus on insuring that each servicer puts in place the system they need to get the job done," says Michael Barr, U.S. Treasury Assistant Secretary for Financial Institutions.
"We'll be holding servicers accountable for doing modification and helping borrowers," Barr says. "And the servicers need to do what each of them need to do individually to reach that goal. For some of them that means better training. For some of them that means ramping up capacity. For some of them that means treating people better in their call centers with respect and more timely help. For each of the servicers there are operational elements that they need to improve. The bottom line is they need to reach the borrowers."
In early August, the Treasury announced that more than 230,000 Trial Modifications had started, and the Administration is now tracking and reporting on servicers' performance. Their goal by November 1 is to reach 500,000 borrowers. Over the next three years, they hope to reach 3-4 million.
"The range of trial modification performance is quite wide," says Barr. "So for example, there are servicers that have modified as much as 25 percent of such loans in their portfolio, or in their servicing portfolio, and there are some that have done an infinitesimally small amount."
However, housing counselors are frustrated in their efforts to reach the servicers.
"Right off hand, I can't think of five real, real quick that's got true loan modifications under which we call the Obama Plan," Gibson says. She points to a file cabinet in the corner of her office. "I've probably got 30 pending," she says. Many are not getting true modifications, according to Gibson. Instead, the lenders are offering temporary modifications and short-term forbearances, with no change in terms.
"I've only seen documents on one and two others that I know are getting it, but I haven't seen the final documents," Gibson says. "And those people, yes, those people are going to be in their homes and they're going to be able to pay for them."
But not all seeking help qualify, with one in 10 Tennesseans out of work.
"Many of the people really are not qualifying for modifications for the simple reason that they don't have adjustable rate mortgages, they don't have double-digit interest rates and APRs," according to Gibson. "They have got FHA insured loans with 6 interest rate, but they've lost their job, and they can't pay that."
Resources for homeowners facing foreclosure:
Memphis Public Library and Information Center/LINC 2-1-1
(Dial 2-1-1 for help)
Community Development Council of Greater Memphis
1548 Poplar Avenue, Memphis, TN 38104
(901) 725-8361
http://www.memphiscommunitydevelopment.com/