July 2010Associated Press
By ALAN ZIBEL, AP Real Estate Writer
WASHINGTON – The Obama administration is revising the latest report on its troubled mortgage-relief program, and the changes are likely to show a greater number of borrowers facing foreclosure after having their loans modified.
The Treasury Department said Wednesday that the mortgage company Fannie Mae, which helps run the program, provided inaccurate information about borrowers who restructured their loans under the program and then missed mortgage payments.
A spokesman said Treasury has hired an outside consultant to review the data.
Analysts at Barclays Capital said last week that the government excluded from the July 20 report around 8,600 borrowers who had already dropped out of the program because they failed to make at least three monthly payments.
The government “is awaiting the outcome of these reviews and will post a revised analysis when that process is complete and we have full confidence in the data,” said Mark Paustenbach, a Treasury spokesman.
Fannie Mae spokesman Brian Faith declined to comment.
The accusations and the subsequent review are the latest problems for the $75 billion program. It has been widely criticized for failing to help hundreds of thousands of homeowners at risk of losing their homes. More than 40 percent of U.S. homeowners seeking help from the program have dropped out.
The July report said that fewer than 6 percent of homeowners who structured lower monthly payments through the program had missed at least two payments within six months of having their mortgages adjusted.
The issue is important because there has been a debate about whether modifications made under the Obama program will perform as poorly as ones done before the program was introduced last year. Loan modifications done in 2008 have default rates of around 75 percent.
The program has been under fire from homeowners, consumer advocates and independent watchdogs for failing to make a big dent in the mortgage crisis. Neil Barofsky, the watchdog for the federal bank bailouts, said last week that the government effort has not “put an appreciable dent in foreclosure filings.”
The program aims to reduce mortgage payments for millions of homeowners who can’t afford their monthly bills. Recent data suggest it has helped about 390,000 households avoid foreclosure. About 530,000 have dropped out.
Meanwhile, the Obama administration on Wednesday launched a national public service ad campaign to promote the program.
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