Mortgage help: 170,000 get permanent aid By Tami Luhby CNN Money 03-12-2010

Mortgage help: 170,000 get permanent aid By Tami Luhby CNN Money 03-12-2010

Mortgage help: 170,000 get permanent aid
By Tami Luhby
CNN Money
March 12, 2010

More than 170,000 troubled homeowners are breathing a lasting sigh of relief now that they've received permanent modifications under the Obama administration's foreclosure prevention program.

Some 15.5% of those who entered the program have gotten long-term adjustments through February, up from 11.5% a month earlier, according to a report from Treasury officials issued Friday.

More than 170,000 troubled homeowners are breathing a lasting sigh of relief now that they've received permanent modifications under the Obama administration's foreclosure prevention program.

Some 15.5% of those who entered the program have gotten long-term adjustments through February, up from 11.5% a month earlier, according to a report from Treasury officials issued Friday.

However, some experts say that more needs to be done to help troubled borrowers, particularly those without jobs or who owe more than their homes are worth.

Even those who make it into a trial modification are not assured of getting permanent assistance. A growing number of people are getting rejection notices as they hit the end of their trial period.

"While the pace of conversion to a permanent modification has stepped up since the program started, it is slow compared to the large number of loans that are still in trial modification," according to Celia Chen, who studies the housing market. "A large number of these homes are expected eventually to be put up for sale, adding to the supply glut and causing prices to decline once again.

When the modification was first announced in February 2009, the administration said it would help up to 4 million people avoid foreclosure. More recently, however, it has changed that goal, now saying that up to 4 million people could qualify for trial modifications.

The shift doesn't sit well with some housing advocates.

"Our measurement of success cannot be based on how many people gain assistance for only a few months, but it must be based on how many people gain permanent and sustainable modifications," said New York State Banking Superintendent Richard Neiman, who serves on the State Foreclosure Prevention Working Group.

Additional efforts
The administration is rolling out new programs to try to keep the housing market on a fairly even keel. Last month, President Obama announced a $1.5 billion initiative to help the unemployed and underwater who owe more than their home's value in five hard-hit states.

And officials will soon implement a foreclosure alternative designed for people who don't qualify for modifications. The administration will pay borrowers, servicers and investors incentives to complete short-sales, in which the bank agrees to sell the home for less than the mortgage amount.

Friday's figures comes a day after an industry report showed the national foreclosure rate fell 2% in February from a month earlier. Yet, RealtyTrac warned that the true number of distressed borrowers may be hidden by the foreclosure prevention efforts.

Many experts are expecting a surge in foreclosures during 2010 as borrowers' attempts to modify their loans fail.

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