June 30, 2009
About 4 months ago the Obama administration introduced the $75 billion loan modifications program to refinance and modify millions of mortgages, by offering government subsidies and incentives for servicers, lenders, and borrowers. Many San Diego homeowners have been hopeful for them to solve their pre-foreclosure mortgage problem.
The program has been ineffective so far with millions of homeowners continuing to slip into delinquency and foreclosure, including in San Diego and Orange County.
Economists attribute the slow progress of the loan modification program to operational constraints faced by mortgage companies. The problem, according to Michael Barr the Assistant Treasury Secretary for Financial Institutions is the lack of promotion of this loan modification program in San Diego, Orange County and other cities where pre-foreclosure and delinquency rates are high. Mr. Barr states “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,”
JPMorgan Chase has added 950 loan counselors since the beginning of the year, bringing the total to 3,500, in order to expedite the process. Loan modifications in San Diego are still taking over 3 months to process and to stop the foreclosure process.
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