Most Borrowers Targeted for Mortgage Relief Don’t Qualify
A majority of the 3.2 million borrowers targeted by the U.S. Treasury Department for mortgage relief under the administration’s foreclosure prevention program are unlikely to qualify, an agency official said.
“Although we know that not every borrower will qualify for a permanent modification, we are disappointed in the permanent modification results so far,” said Allison, who is the former chief executive officer for federally controlled mortgage- finance giant Fannie Mae.
Foreclosures remain high, so the Obama administration plans to expand its program to encourage loan modifications.
Cash Incentives for Mortgage Servicers
As the loan modification plan, $75 billion Making Home Affordable Program now stands, the Treasury awards mortgage servicers $1,000 initially — and $1,000 annually for up to three years — each time they agree to lower a troubled borrower’s payments rather than foreclose on the property. Those cash incentives come from the government’s $700 billion TARP financial bailout package. The program has been a disappointment.
What is a Mortgage Servicer
A mortgage servicer is the company that borrowers pay their mortgage loan payments to. Mortgage servicers either purchase or retain mortgage servicing rights that allow them to collect payments from borrowers in return for a servicing fee.
The duty of a mortgage servicer varies, but typically includes the acceptance and recording of mortgage payments; payment of taxes and insurance from borrower escrow accounts; negotiations of workouts and modifications of mortgage upon default; and conducting or supervising the foreclosure process when necessary.
Many borrowers confuse mortgage servicers with their lender. A mortgage servicer may be a borrower’s lender, but often the beneficial rights to the payment of principal and interest on mortgages are sold to investors such as Fannie Mae, Freddie Mac, Ginnie Mae, FHA, and private investors in mortgage securitization transactions.
Most Targeted for Mortgage Relief Don’t Qualify, Official Says
