The Obama administration's mortgage relief program has reached one in five eligible homeowners, a government report says, but most of those borrowers are on temporary trial plans that have yet to be made final.
As of the end of October, more than 650,000 borrowers, or 20 percent of those eligible, had signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels.
To make the change permanent, though, borrowers must complete a big stack of paperwork and show they can make their payments on time. At the beginning of September, only about 1,700 permanent modifications had been made. The Treasury Department expects to release updated data later this month.
"We're seeing some early indications that the servicers haven't done enough to get all the documents in," said Michael Barr, an assistant Treasury secretary.
Consumer advocates say banks aren't doing enough to follow through. "It's going to be the make-or-break issue," said Alan White, a law professor at Valparaiso University and a consumer attorney. The government, he said, will have to "crack the whip or consider firing some of these servicers."
Mortgage companies that are performing poorly, he said, should have their right to collect payments on loans revoked and transferred to companies that are doing the job better.
One legal challenge to the program was rejected this week, when a federal judge dismissed a class action lawsuit filed by a group of Minnesota homeowners who sought to block foreclosures in that state. The lawsuit claimed the program, failed to give people proper notice when they were rejected or the right to appeal.
U.S. District Judge Ann Montgomery dismissed the case Monday, saying the federal government has never made loan modifications an entitlement.
Mark Ireland, an attorney for the homeowners, said Tuesday that they're disappointed and will decide later whether to appeal, but also noted that the government has since made changes to the program that satisfy some of the borrowers concerns.
Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July.
In California, about 130,000 homeowners have been enrolled in the "Making Home Affordable" loan modification plan, which President Barack Obama unveiled in February. That works out to about 19 percent of the state's homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.
Two other hard-hit states, Arizona and Nevada had similar rates of assistance as California, at 22 percent and 18 percent respectively. Florida, however, was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that don't qualify for the program.
Government officials say they are pressing mortgage companies hard to improve their performance. Still, many housing advocates have been disappointed with the $50 billion plan's progress and say that getting a loan modification remains a battle.
And economists doubt the Obama administration will reach its broad goal of helping 3 million to 4 million borrowers within three years.
Traditionally mortgage servicers were low-cost operations, with workers in collections departments trying to wring payments from tardy borrowers. Those workers, and thousands of new ones, are now engaged in a far different job - figuring out whether thousands of borrowers qualify for help.
Banks, for their part, have been slow to adapt to an unfamiliar climate of sinking home prices and rising unemployment.
My 2 Cents on all this and why Colorado or at least the Pikes Peak Area of Colorado home owners does not seem to be getting what they should.
Well they act like this is good news for people. I just want to tell you that people i have delt with in the Woodland Park Teller County Real Estate Colorado have not been having any luck with this. It seem's people that have been behind due to job loss or other unforseen issues have been getting a raw deal.
Most of them now have a new 30 year mortgage yes at a lower interest rate but the money they were behind was added back into the loan so now they lost the five or so years they were paying on the house and now are paying intrest on intrest for the next 30 years.
Here is what happened to one WELLS FARGO mortgage owner in Divide Colorado this person was behind on their mortgage to to unforseen issues. The person paid every payment he could when they did get some money. Then finally after almost a year with no luck finding any work this person found a job that they now could pay their mortgage on time. So the called Wells Fargo and explained (which the owner was always in contact with the bank) So Wells fargo set this person up on a 3 payment plan which was $150 a month higher than the current ppayments. This owner paid this ontime then the bank told them to call back and they would modify the loan. time pasted wells fargo sent a new modification (so called relief) stating what was owed before and now the new terms interest went down about 1% 11k late fees and all other back payments added to back of the loan not intrest free mind you which most of this money was already intrest and now this person has a new 30 year mortgage for more than they paid for the house five years ago mind you in a good market. So they called Wells Fargo and said this is unaceptable, Wells fargo in short simply said take it or leave it. $8336.22 more will be paid for this house when today as everyone knows this home is worth less than it was 5 years ago.
so all in all Wells fargo stands to make an extra $8336.22 on someone that had problems with there mortgage what is wrong with people today. 
Mortgae Relief? come on.
Seems like the banks are making out hand over fist again.
What do you think?
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