If you're one of the 787,231 people who now has a trial modification, you better be sure your paperwork gets completed on time. People whose deadline was December 31, 2009 received an extension until January 31
, but the government says there will be no more extensions.
The good news is that more people are successfully completing mortgage modifications. As of the end of December, 66,465 households completed the modification process
, according to Treasury statistics. That's more than double the number of completed mods from November, when federal officials decided to get tough with lenders. Another 46,056 modifications were awaiting final signatures.
Still, underscoring the lingering problems, 48,924 people were denied permanent modifications because they did not make their trial payments, did not complete the necessary paperwork or did not meet the program's criteria. Loan servicers continue to peg trouble getting the necessary paperwork as the primary reason modifications fail. Borrowers, however, tell a different tale, involving numerous attempts to send paperwork that only seems to get lost on the other end.
For those people fortunate enough to secure a modification
, the median monthly payment dropped from $1,419 to $830 for permanent modifications, the Treasury said.
The rate of success varies by banks. Large banks took longer to get their programs running than smaller mortgage lenders, so are to some extend playing catch up. So how are they doing?
Citigroup, who is still owned partially by the government, had the most success. It has placed 47 percent of its eligible delinquent borrowers in trial modifications. Saxon Mortgage, a subsidiary of Morgan Stanley, came in a close second, with 46 percent. Other contenders were JPMorgan Chase, with 36% of eligible homeowners in trial modifications, and Wells Fargo, which put 34% of its eligible homeowners in trial modifications.
Of the large banks, Bank of America has the worst track record, with just 19% of its eligible homeowners in trial modifications.
That's just trials, though. The banks still lag on translating temporary fixes into long term solutions. Wells Fargo did the best job of successfully getting its eligible borrowers into permanent modifications - 2.41 percent. But that doesn't sound like a great achievement to me. Citi placed second, with just 2.1 percent of its borrowers in permanent modifications. For Chase, it's just 1.68 percent.
And what happens to those unlucky borrowers who don't get a permanent modification? Sometimes find they are eligible for another loan modification program their bank offers. But most end up in foreclosure or sell their home through a short sale.
The biggest problem is fixing the foreclosure mess continues to be a lack of programs to help the unemployed and under-employed. No such programs have yet been announced by the administration. But ideas are under consideration, and some observers expect the administration's next budget to include plans to help the unemployed stay in their homes.
Since March, more than two million additional borrowers have fallen behind at least 60 days on their loan payments.
Lita Epstein has written more than 25 books including The 250 Questions You Should Ask to Avoid Foreclosures.