Homeowners save billions by modifying mortgage loans

Millions of homeowners are swamped in mortgage debt, but a lucky few are finding relief by modifying their loans – with the full support of the federal government.

The Department of the Treasury instituted a program last year to provide incentives to mortgage lenders who help floundering homeowners. Lenders who modify struggling borrowers’ home loans receive a cash payment from the Treasury – and, according to the government, the program is picking up steam.

The Home Affordable Modification Program, as it is known, has helped permanently modify more than 116,000 mortgages, the Treasury said on Wednesday. Another 76,000 permanent modifications have been offered and “are waiting only for the borrower’s signature.”

“Struggling families are receiving payment relief” under HAMP, Homeownership Preservation Office chief Phyllis Caldwell noted: An aggregate of $2.2 billion has been saved by modifying home loans.

But a recent S&P report criticized the program, predicting that many modified loans will still fail.

Other critics have complained that the HAMP process is confusing and leaves many applicants stuck between trial and permanent stages of modification – but the Treasury’s latest data suggests that HAMP is having measurable effects.

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