Let the Public Pressure Campaign Begin

Posted on 26 December 2009 by Aaron Hofmann

Last week, the Obama administration issued their first monthly reports on mortgage loan modifications, which is really intended not to show America that the government is watching, but more of trying to publicly disgrace banks into making a concerted effort to fix the issues that they so aptly created. As we mentioned in the article, “Who to Believe?“, this will be part of the administration’s strategy to ensure the banks work to help keep struggling Americans in their homes.

The initial report included more than 30 lenders, but noted two banks, Bank of America and Wells Fargo, as having a dismal rating, which is concerning since they have received large sums of taxpayers’ bailout money. The rescue money that was spent on the banks was expected to encourage greater lending and more loan modifications.

The report indicated that Bank of America only extended modification offers to 13% of the nearly 800,000 mortgages that were at least 60 days late on payments and potentially eligible for a modification. It began trial loan modifications with only about 4 percent, or 27,985 borrowers.

Wells Fargo led the banking sector’s voluntary loan-modification program during the Bush administration’s efforts. However, the initial report indicated that Wells had serviced 329,085 mortgages that were 60 days late, it extended offers to only 38,673 homeowners, or about 12 percent of those eligible, and started trial modifications with another 20,219 loans, about 6 percent of the eligible.

I’m sure we will be getting the bank’s interpretations of this report and their own PR spin along the way. So the question ultimately will be whether the Obama administration’s plan can pick up pace are start making real improvements or will it continue to flounder.

With the new short sale incentives being introduced, but not taking effect until April 30th, it will be interesting to see what happens in the coming months. If you are an Atlanta home owner and you are behind in your mortgage payments, be sure to contact us . We’ll be glad to discuss your situation and offer solutions and a step-by-step strategy to avoid foreclosure.

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