Underwater Homeowners Continue to Struggle

The government is ramping up its foreclosure prevention plan.   As part of the President's $75 billion foreclosure modification program, eligible borrowers who are at risk of default are being allowed (upon approval of course) to lower their monthly payments on a trial basis for several months to make sure that they can handle the adjusted payments.  

Trouble is that so far only 4% of the trial adjustments have been made permanent after 3 months.   The reason:  well depends on who you ask.  The mortgage companies claim that only 33% of the homeowners currently involved in the "trial" have submitted all of the necessary paperwork to make the adjustment permanent.  In fact, 20% have not submitted anything.   On the other hand, frustrated homeowners say that the financial institutions are repeatedly losing their paperwork.  

The bottom line is that to this point the program that was supposed to have a widespread affect on stemming the foreclosure trend has not lived up to its billing.  

Last week the government again stepped its game up and send what they called "SWAT" teams into these financial institutions to determine what the biggest hold up may be.  The banks are now responsible for submitting progress reports on their modification files twice a day during the month of December as a means to speeding up the conversion process.   

The goal has been to shift 375,000 borrowers from temporary status to permanent status by years end.  A benchmark that is quickly appearing quite unrealistic.