Shortly after the government urged them to step up their loan modifications, mortgage loan modification servicers are finding it hard to keep up with requests and inquiries from thousands of struggling borrowers. Borrowers, on the other hand, are beginning to get frustrated at the long waits.
A performance report by the Treasury Department showed that response times varied widely from one Mortgage Company to another. Many borrowers who try to get loan modifications either have to wait several months, get evasive excuses, or get no response at all.
The report also showed that only a small fraction of troubled homeowners have benefited from the government’s loan modification program. Only 9% of borrowers who meet the loan modification requirements had been given lower monthly payments as of July.
In a joint letter to mortgage servicers, Treasury Secretary Timothy Geithner and Housing Secretary Shaun Donovan said that much more progress would be needed to help struggling borrowers. They urged the companies to stay more consistent in their goals, particularly in converting trial modifications into permanent fixes.
Mortgage companies replied that they were doing their best to work out more loans, but the volume of requests was simply overwhelming.
John Dalton, president of the Housing Policy Council under the Financial Services Roundtable, said that servicers were not accustomed to handling such a large number of modifications. According to him, around 3 million people were currently 60 days overdue on their loans.
Dalton added that the industry is currently “reinventing” itself to adapt to its new role, from payment collector and processor to aid provider.
Many homeowners simply have a problem with the processing times. Often, experts say, they would only talk to the representatives, who would decide when to forward applications to the decision-makers. With the longer processing, however, many homeowners are left in line, and some end up in foreclosure before they could be helped.
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