- The Washington Times - Wednesday, August 5, 2009

The government’s $50 billion program to ease the mortgage crisis is helping only a tiny fraction of struggling homeowners, and a list released Tuesday showed which lenders are laggards.

As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced with modified loans. And the first monthly progress report showed that 10 lenders had not changed a single mortgage.

The report indicated that lenders such as Bank of America Corp. and Wells Fargo & Co. have lagged behind government expectations. Both banks received billions in federal bailout money.

Bank of America modified just 4 percent of eligible loans, and Wells Fargo 6 percent. Wachovia Corp., which was taken over by Wells Fargo in December, modified only 2 percent.

“We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy,” said Michael Barr, the Treasury Department’s assistant secretary for financial institutions.

“We expect them to do more.”

Wells Fargo says it plans to speed up its efforts, signing up most borrowers for the Obama plan with one phone call and sending customers a trial offer within two days.

The report is “only part of the story” because the numbers do not reflect an additional 220,000 loans that Wells Fargo modified outside the Obama plan this year, a company executive said.

Bank of America did not immediately comment.

Meanwhile, foreclosures continued to rise. About 1.5 million households received at least one foreclosure-related notice in the first half of this year, according to RealtyTrac Inc.

“There are certainly more foreclosures going on in the country than there are modifications - by a long shot,” said Bruce Dorpalen, director of housing counseling at Acorn Housing, a nonprofit housing group.

He said his group has intervened to prevent about 500 foreclosure sales in cases where borrowers wanted to be considered for the Obama plan.

A housing counselor told Veronica Cassella, 36, she should qualify for a loan modification, but Green Tree Servicing LLC claims she does not. Mrs. Cassella, who works at a hair and nails salon in Visalia, Calif., has seen her income shrink with the economy from $35,000 to $25,000.

Her husband still works, but their income is not enough to cover the $213,000 mortgage on their home, which has lost roughly half its value.

“My life has been a standstill with these people for at least half the year,” Mrs. Cassella said. Green Tree, which modified 4 percent of eligible loans, did not return calls for comment.

There are 38 companies participating in the government program, and some noticeable holdouts that control 15 percent of outstanding mortgages.

So far, banks have extended only 400,000 offers among 2.7 million eligible borrowers who are more than two months behind on their payments.

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