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Slow Start for Federal Mortgage Programs

The Treasury Department said this week that ""Making Home Affordable"":http://www.makinghomeaffordable.gov servicers have extended 150,000 loan modification offers to distressed homeowners, and about 55,000 borrowers are already enrolled in the three-month modification trial. In addition, about 3,650 homeowners have refinanced their mortgages through the government-driven program, although the Treasury says tens of thousands of loans are still in process.
It's been only three months since the administration announced the details of its Making Home Affordable plan, and only mid-April since the servicer contracts for the loan mod piece were made available. Still, some critics are calling the administration's progress report a mere drop in the bucket, considering more than two million foreclosures are expected this year alone and the government has said its goal is to help an estimated nine million homeowners through 2012.
The Treasury reports that 16 mortgage servicers are now ""contracted to provide federal loan modifications"":http://www.makinghomeaffordable.gov/contact_servicer.html. Combined with the market shares of Fannie Mae and Freddie Mac, the Department says these companies represent more than 80 percent of the nation's $9 trillion-plus in single family mortgages.
The latest servicer to be added to the administration's official list of Making Home Affordable providers is Residential Credit Solutions of Fort Worth, Texas. Residential Credit Solutions is slated to receive up to $19.4 million in incentive payments for its participation in the program.
The nation's largest lenders - including JP Morgan Chase, Wells Fargo, Citi, the Bank of America-Countrywide conglomerate, and GMAC - have agreed to provide mortgage modifications under the federal guidelines. Specialty subprime servicer Ocwen Financial, along with Saxon Mortgage, Select Portfolio Servicing, Wilshire Credit Corporation, Home Loan Services, Green Tree Servicing, Carrington Mortgage Services, Aurora Loan Services, and Nationstar Mortgage have also signed contracts.
Last week, the Treasury Department made adjustments to the incentive amounts it had allocated to some of the servicers. Most of the new funds will go to Countrywide Home Loans, who is now set to receive another $3.3 billion, on top of the $1.9 billion the Bank of America subsidiary was allotted when it first signed on to the program in mid-April. Six other servicers received smaller bumps in their incentive amounts, but the Treasury subtracted from CitiMortgage's and Ocwen Financial's allocations.
In a footnote to its regular ""transactions report"":http://www.financialstability.gov/docs/transaction-reports/transactions-report-061609.pdf, the Treasury says the incentive caps listed represent the potential amount to be awarded, and is subject to adjustment based on the ""individual servicer usage for borrower modifications."" In total, the Treasury has estimated $18.5 billion of its $75 billion commitment to the program will be paid out to the 16 contracted servicers for the loan modifications they make.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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