Obama Home Rescue: 650,000 Get Help

By Tami Luhby

CNN Money

 

Latest report shows that 20% of eligible borrowers have gotten trial modifications under administration’s $75 billion mortgage relief plan.

 

Some 650,000troubled borrowers have been put into trial loan modifications under the president’s foreclosure rescue plan, the Treasury Department said Tuesday.

 

That number represents 20% of eligible homeowners at least 60 days behind in their payments, according to the Treasury report. This is up from 16% a month earlier.

 

Despite the progress, housing counselors say the number of people falling into foreclosure vastly exceeds the ranks getting assistance. The number of filings hit a record high of 937,840 in the third quarter, according to RealtyTrac, an online marketer of foreclosed homes. That’s a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

 

The $75 billion Obama plan is “lagging behind the massive number of foreclosures that continue to pile up,” said John Taylor, head of the National Community Reinvestment Coalition.

 

But administration officials have said that the program, which was projected to help up to 4 million homeowners, is on track.

 

The rescue tries to keep borrowers in their homes by adjusting monthly payments to no more than 31% of a borrower’s pre-tax income. Servicers, borrowers and investors can get financial incentives to participate.

 

Administration officials have been pressuring loan servicers to ramp up their modification efforts. Many people have complained that financial institutions lose their paperwork, transfer them repeatedly between departments and require that they fill out applications again and again.

 

But the rising unemployment rate is prompting more homeowners, even those with strong credit histories, to fall behind on payments. And the president’s plan is not designed to help the jobless.

 

At Neighborhood Housing Services of Chicago, only about one in four people are getting help from the Obama program, said Michael van Zalingen, director of homeownership services.

 

About 30% are not being put into trial modifications for reasons including too little income or too much equity in their homes, van Zalingen said. The rest are in limbo, mainly because the banks say their applications are incomplete.

 

Certainly, banks have quickened the pace of loan modification approvals, van Zalingen said. His group secured 180 modifications for clients in the second quarter, but was able to help 400 in the third quarter. He expects that a total of 1,000 clients will be put into trial modifications by year’s end.

 

Still, the modifications are not keeping pace, van Zalingen said. NHS-Chicago will see 3,000 to 3,500 distressed borrowers seek help this year. “Loan servicers are offering trial modifications more often, but not anything like the need or demand,” he said.

 

Just how many modifications are completed depends on the servicer. Performance remains very uneven, as it has since the start of the program.

 

Through October, Saxon Mortgage Services put 44% of eligible delinquent borrowers in trial modifications — the highest percentage of about two dozen companies. Among the largest banks, Citigroup (C, Fortune 500) came in at 40% and JPMorgan Chase (JPM, Fortune 500) 32%, while Wells Fargo (WFC, Fortune 500) has placed 29% and Bank of America (BAC, Fortune 500), the biggest servicer, 14%.

 

What’s becoming even more important is how many people in trial modifications receive permanent adjustments. The Treasury in September lengthened the trial period to five months, from three months, to give borrowers more time to send in their paperwork and banks to process it.

 

Treasury’s monthly updates are expected to start reporting the number of permanent modifications offered within the next few months.

At times the sellers themselves thwart the efforts of the Real Estate Agent. Nothing can be quite as frustrating as trying to pull all the weight when someone else is adding to the burden by being uncooperative!

If you have a seller who is not making sure their home is presentable to a potential buyer, remind them that, in a competitive market with more inventory than we’ve seen in some time, presentation is everything! By eliminating points the potential buyer may find fault with and bringing out the positive amenities, they are more likely to sell the home and get the price they are asking for. Here are just a few tips that will help them support your efforts as their representative in the transaction:

Let There Be Light. Buy some 100-watt bulbs to brighten the rooms, and open curtains or blinds to let light in. Unless a window faces a brick wall or some type of eyesore, open the drapes!

Garage, Not Garbage. Have a garage sale to clean out the clutter and make the garage more spacious. Your clients are moving and will need to start organizing anyway, so why wait until the last minute? Clean up oil spots in the garage or carport with a good cleanser to remove that “lived-in” appearance. The home may not be brand new, but it’s new to the potential buyer.

Make Scents. Get a nice potpourri air freshener, or keep some refrigerated cookie dough on hand to throw in the oven when a prospect is coming over. Make the house smell like a home.

Paint-relief. Consider re-painting any areas that need to be touched up, especially the front door and entryway, and any appliances that are showing their age.

Power Plants. Trim down any jungles outside, especially if they cover the house. Get rid of any half-dead houseplants. Water the lawns briefly before any visit, and keep the lawns mowed and edged.

The Price is Right. Price may be a sensitive issue, but with increased inventories and declining home values in many neighborhoods, remind your clients that every shopper in a buyers’ market is determined to get the best deal possible. Let them know that now is a good time to compare their house with others on the market in the same area, because the right price is the one thing that will sell their house faster than anything else.

The World is Your Stage. Professional staging can help to showcase the best side of a home, create more interest, and get your clients top dollar. With increased inventories, staging could provide the competitive edge you need.

These tips were derived from 33 Ways to Sell Your Home Fast!, an info-marketing booklet I use as part of my campaign to market my services to FSBOs. In many cases, people who are attempting to sell their own home eventually become frustrated and end up asking me to refer them to a professional Real Estate Agent.

If you are looking to sell your home in Macomb, Oakland, Wayne, or St Clair County, please call or email me anytime for a referral to a great local Realtor.