The number of homeowners in the Obama administration's flagship foreclosure prevention program is growing, data released Wednesday show. Yet it's not all good news.
About 231,000 homeowners have completed loan modifications through March. That's about 21 percent of the 1.2 million borrowers who began the program over the past year.
But another 158,000 homeowners who signed up have dropped out — either because they didn't make payments or failed to return the necessary documents. That's up from about 90,000 just a month earlier.
Many more applicants are still in limbo, awaiting a final answer from their bank. Meanwhile, a Treasury Department official said Wednesday that the administration is working to get the foreclosure prevention effort on track after a slow and problem-plagued start.
"When you're doing something at this scale that's never been done before, you're going to have challenges," Phyllis Caldwell, chief of the Treasury Department's homeownership preservation office, said in an interview.
The program is designed to lower borrowers' monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Mortgage companies get taxpayer incentives to reduce borrowers' monthly payments. Homeowners have to complete at least three months of payments to qualify.
Treasury officials say many disqualified homeowners will end up getting help anyway. If not, they are still eligible for $3,000 in moving expenses — if their bank agrees to let them sell their home for less than the value of the mortgage.
Earlier in the day, a watchdog panel's report said the $75 billion program lags well behind the foreclosure crisis and leaves consumers strapped with high levels of debt.
More than a year after the plan's launch, the Obama administration "is still fighting to get its foreclosure programs off the ground," said Elizabeth Warren, who heads the independent Congressional Oversight Panel set up by Congress.
Lawmakers, deluged with calls from homeowners seeking help, are feeling the heat. "The fact of the matter is our constituents are unhappy," said Maxine Waters, D-Calif.
Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.
Obama officials, meanwhile, stress the plan's limitations.
"We cannot stop every foreclosure," David Stevens, who runs the Federal Housing Administration, told lawmakers. "Some people simply cannot afford to stay in their homes."
Earlier in the week, top banking industry executives expressed skepticism about helping troubled borrowers by forgiving a portion of their debt.
The executives told lawmakers on Tuesday they are reducing the amount that troubled borrowers owe on their home loans only in limited cases. That's because consumers who are paying their mortgages on time are likely to see such reductions as unfair.
But Jamie Dimon, chief executive officer of JPMorgan Chase & Co., which has been skeptical about mortgage reductions, told analysts Wednesday that "we're not ideologically opposed to principal forgiveness."