The Obama administration still claims that they are on track to help some 4 million troubled mortgage borrowers over the next three years with the help of alteration in the terms of their loans. Although some 60000 borrowers have been benefited from Obama foreclosure prevention program, but some analysts are skeptical.
Moody’s expects that Obama home mortgage modification program will help only half as many people as the government hopes. Moody’s further says that even that figure may be difficult to achieve. Writing in a recent note Chen, Moody’s analyst said that the number of modifications will have to step up substantially in the remainder of this year in order to hit the 1.5 million to 2 million modifications.
The Treasury Department acknowledges that servicers need to speed up their workout activity in order to hit a November goal of 500,000 loan modifications, but officials insist that even with just 235,000 trial workouts made, initial goals for the program could still be met.
A further issue is whether the modifications are enough to keep homeowners’ heads above water, or whether they slide back into default. “To the extent that future modifications help to reduce the default rate, as opposed to just postponing defaults, the lifetime losses could be lower than our projections,” said Amita Shrivastava, an analyst at Moody’s.
Obama’s Mortgage Modification Program that allows borrowers with little or no equity in their home to refinance has helped about 60,000 homeowners so far. The refinancing program is part of the Obama administration’s massive housing program, known as Making Home Affordable.
Obama administration’s mortgage modification initiative is one good step to help foreclosure. All it requires from borrowers is proper documentation and fax in their applications for quick contact. Since, many of the people are unaware of the requirements and procedures; they feel that faxes can be problematic. This may cause the aid to be delayed or denied.