Loan modifications growing, U.S. says

Increase in activity comes amid confusion on standards; foreclosures not letting up

The Obama administration said Wednesday it is on track to secure 500,000 trial loan modifications for struggling homeowners by Nov. 1, as both the number of participating mortgage companies and the number of offers extended under the Home Affordable Modification Program increased last month.

The second report from the Treasury Department on its $75 billion mortgage relief program showed modest improvement, but officials said they planned more initiatives to increase the program's success.The results: Nineteen percent of the almost 3 million eligible borrowers who were 60 days or more delinquent were offered three-month trial modifications and 12 percent of them, about 360,000 homeowners, have begun them.

"We are certainly seeing more resolutions happening out in the field, and we are seeing it more routinely with the biggest servicers," said Bruce Dorpalen, Acorn Housing Corp.'s national director of housing counseling.

Some of the largest servicers say they continue to work on loan modifications through their own internal programs as well as the government's effort.

Two of the banks that did not fare well in last month's report, Bank of America and Wells Fargo Bank, both reported improved results but still lagged behind other industry heavyweights like JPMorgan Chase Bank, CitiMortgage, Saxon Mortgage Servicing and Aurora Home Services.

"HAMP is just a piece of the overall story," said Mike Heid, co-president of Wells Fargo Home Mortgage. "We're very pleased with a 64 percent increase" in modifications made during the past 30 days.

The concern: Some consumers are being told to submit all their financial data again as the trial period ends and others aren't because there's no uniformity in how the different servicers administer the program, housing counselors say. Also, some homeowners are reluctant to sign trial modifications without knowing the terms of a permanent change that would take effect when the three-month trial period ends.

"It seems a lot to ask people to sign a document that says, 'Trust us on this one,'" Dorpalen said.

Why continued progress is important: Foreclosure actions show little sign of letting up. A report scheduled to be released Thursday by RealtyTrac shows that August foreclosure filings nationally were up 18 percent from a year ago.

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