WASHINGTON (Reuters) - The number of borrowers helped by the Obama administration’s marquee foreclosure prevention program continued to dwindle in October, data released by the Treasury Department on Thursday showed.
About 16,634 borrowers obtained a permanent loan modification in October, down from 17,771 in September.
And the number of dropouts continue to outpace the number of borrowers getting permanent help.
At the same time, about 26,679 borrowers dropped out of the program in October, bringing to about 756,000 the total number of borrowers who have defaulted since the program’s inception in the spring of last year.
About 483,000 borrowers have received permanent modifications under the Home Affordable Modification Program, known as HAMP. Treasury initially hoped to offer help 3-4 million borrowers, though they have since scaled back those ambitions.
Treasury launched HAMP to try to find a way to reduce mortgage payments for struggling homeowners who wanted to keep their homes but who were at imminent risk of foreclosure.
But it is widely regarded as a flawed program. Lawmakers say it is failing to ease the strain on households where incomes have been sapped by slow economic growth, high unemployment and red tape imposed by banks that makes it hard to meet all the hurdles for a temporary or permanent reduction in monthly payments.
Fresh data on Thursday from the Mortgage Bankers Association showed a modest decline in the mortgage delinquency rate in the third quarter. The rate dropped 0.72 percentage points from the prior quarter to 9.13 percent.
But the bankers’ group offered little hope for lasting improvement, noting there was a potential for 4.5 million foreclosed homes to hit markets over the next three to four years on top of four million already listed.
Banks are already fighting a rearguard action against revelations that they used “robo-signers” to hasten the pace of foreclosures, an act that infuriated homeowner advocates and led to hearings where bankers and regulators were hauled before angry lawmakers.
The paperwork fiasco, together with the slow pace of modification programs like HAMP, has reignited public anger with banks that received billions of dollars in taxpayer aid engineered by Treasury during the financial crisis.
Reporting by Corbett B. Daly; Editing by Diane Craft