Paper Avalanche Buries Plan to Stem Foreclosures

New York Times ^ | June 28, 2009 | Peter S. Goodman

[Lorianne]

... it is a potent indication of the difficulties afflicting the $75 billion taxpayer-financed program created by the Obama administration in an effort to avoid foreclosure for as many as four million distressed homeowners.

Under the plan, the government offers mortgage companies $1,000 for each loan they agree to modify, then another $1,000 a year for up to three years.

Hanging in the balance is more than the fate of individual homeowners. The administration portrays its mortgage program as a crucial piece of its broader effort to restore vigor to the economy. If the effort fails, foreclosures will continue to surge and home prices will probably keep falling, sowing fresh losses in the financial system and threatening to crimp credit anew for businesses and households.

Yet in the four months since the Treasury Department announced the program, millions of new homeowners have slipped into delinquency and foreclosure. For now, progress is constrained by the limited capacities of mortgage servicing companies, said Michael S. Barr, the assistant Treasury secretary for financial institutions. He offered the first signs of the administration’s impatience with the institutions that control home loans.

“They need to do a much better job on the basic management and operational side of their firms,” Mr. Barr said. “What we’ve been pushing the servicers to do is improve their infrastructure to make sure their call centers are doing a better job. The level of training is not there yet.”

The administration still does not know how many mortgages

[givemELL]

The idea that there is in existence the infrastructure with a will to process 4 million mortgages at any price is laughable. CA has almost 700,000 Alt As and Option arm mortgages to process, and has only been able to process for modification less than 20,000...the backlog will take 18 years to process at the same rate according to a recent article. 4 MILLION??!! under Os’ plan.

[peace with honor]

the companies that ‘assist’ home buyers do a modification charge $3000 up front

[dawn53]

We just bought a foreclosure and it’s a bizarre experience. Everything was signed on one end, and sent to another city, then signed on their end, and confirmation sent back. No real formal closing, just paperwork fedexed back and forth. I asked our real estate agent if they did “regular” closings like we did years ago, (where everybody sits at a large table, you give them money, they give you the keys after you sign a mountain of paperwork) and he said very seldom does that happen anymore because there just aren’t a lot of conventional real estate sales being done.