Foreclosure Effort Made Modest Strides in August - By Jessica Holzer Wall Street Journal 09-09-2009

Foreclosure Effort Made Modest Strides in August
By Jessica Holzer
The Wall Street Journal
September 9, 2009

WASHINGTON -- The Obama administration's $75 billion foreclosure-prevention effort made modest strides in August, according to a report released Wednesday by the Treasury Department.

The data come amid growing concern that the effort, which relies on hefty government incentives for lenders and borrowers, won't be enough to dent mounting foreclosures around the country.

More than 570,000 trial modifications have been offered to borrowers under the program and around 360,000 trial modifications are under way, according to the Treasury report.

However, mortgage defaults continue to soar as job losses pummel U.S. household finances. Nearly one in 12 borrowers are seriously delinquent on their mortgage, the Mortgage Bankers Association reported last month.

And the largest mortgage servicers continue to face challenges implementing the program, the data show. J.P. Morgan Chase has offered trial modifications to only a quarter of eligible borrowers. Citigroup has offered trial modifications to just 23%. Meanwhile, Wells Fargo & Co. trails far behind at 11%.

Of the 47 mortgage servicers that have signed on to participate in the program, Saxon Mortgage Services, a subsidiary of Saxon Capital Inc., has performed the best, having offered trial modifications to 39% of eligible borrowers.

Treasury Assistant Secretary for Financial Institutions Michael S. Barr will trumpet the program's progress in a U.S. House hearing later Wednesday.

"There are clear signs that the incentives offered under the Home Affordable Modification Program are having a substantial effect," he said in prepared remarks.