(Recasts, adds permanent loan modification percentage, details)
By Corbett B. Daly
WASHINGTON, Feb 17 (Reuters) - A government program to help struggling homeowners modify their mortgages has almost a million active borrowers, but just over 3 percent of the eligible borrowers have permanent loan modifications, according to a Treasury Department report released on Wednesday.
It said there were 946,735 active loan modifications through January and 116,297 of those have been made permanent. That was up from 853,696 active loan modifications and 66,465 permanent loan modifications through December.
Just 3.4 percent of the 3.4 million eligible borrowers — those with loans delinquent more than 60 days — have had their loan modifications made permanent, according to the Treasury.
That is up from 1.9 percent in December. The Treasury said it still hopes to help 3 to 4 million homeowners by 2012 under the $75 billion program.
The Treasury highlighted that about 28 percent of eligible borrowers had been helped through January through both active trial and permanent modifications. That was up from 25 percent through December.
“Struggling families are receiving payment relief and the housing market is showing signs of stabilization,” said Phyllis Caldwell, chief of the Treasury’s Homeownership Preservation Office.
Most loan modifications result in lower monthly payments, although some lead to reduced principal on mortgages. Trial modifications were initially for three months, but the Treasury added 60 days, effectively making them last five months.
Borrowers need to submit more detailed documentation to make a loan modification permanent.
California and Florida, which have each seen dramatic declines in home prices, topped the list of trial and permanent modifications at 191,641 and 116,569 respectively.
The monthly report comes a day after Standard & Poor’s said the Obama administration’s efforts to keep people in their homes may be prolonging the nation’s housing crisis, which could continue for several years as prices fall and foreclosures rise.
S&P said that recent data showing modest improvements in the housing market are misleading because there is a growing “shadow inventory” of homes that could undo U.S. housing price gains as they come on to the market after foreclosure.
U.S. housing starts rebounded more strongly than expected in January to their highest level in six months, while permits fell slightly less than forecast, the Commerce Department said in a separate report. (Reporting by Corbett B. Daly; Editing by Dan Grebler)