The numbers of home owners in Chicago-area who got permanent loan modifications under the Federal Government’s Program increased by 17% in May, but the local home owners were unable to qualify for the trial payment programs intended to fight foreclosures for sale. As such many have been disqualified from the program. As number of house owners receiving aid plunged, many got assistance outside the Obama rescue Plan.
The Chicago area ranks third among metro areas nation wide to get help from Obama Government’s mortgage rescue plan. It accounted for 5.1% of nationwide activity under the HAMP. The program was started because of wave of foreclosures due to the economic down turn, rising rates of unemployment and mortgage scams. Incentives are given to borrowers to change the existing mortgages by reducing monthly payments.
According to officials of Treasury department, in May, 17,428 Chicago area residents got a permanent modification under the Federal Government’s HAMP (Home Affordable Modification Program) introduced last year in comparison to 14,890 borrowers in April. However the number of home owners in genuine trial modifications declined by over 26% in May, touching 23,640.
The report shows that nationally, 48.9% of home owners who found themselves unable to qualify for permanent modification under this plan with the eight largest servicers were able to find other alternatives to foreclosures for sale. Thus only 7% of cancelled trial modifications ended in foreclosure with the largest servicers.
Assistant Secretary Herb Allison pointed out that majority of people who were disqualified from HAMP, are either getting an alternative loan modification or have become current in their mortgage payments or are waiting for action.
The Obama administration released this data as part of a ‘Monthly housing score card’ which tries to show the overall status of the housing market. It shows the efforts of both the Federal government as well as Servicers to slow the deluge of foreclosures and the action of the government to help reduce monthly payments and enable home affordability.
According to Shaun Donovan, secretary to the government, the report ‘helps people connect the dots” and reveals that the housing sector is in much better condition than what was predicted two years ago.
But the scorecard which collects information from various indicators in the housing market also shows that the housing industry faces many challenges even now. Data reveals that 1.3 million mortgages nationwide remain under water, indicating that more is owed on their loans than the worth of their homes. Data also reveals that there is increasing default of prime, sub prime and Federal Housing Administration Loans. All indicate that the Foreclosures crisis is far from over.
