Recent press reports have shown a growing sense of frustration not just on behalf of borrowers trying to apply for loan modification, but also on the part of the government officials that worked so hard to negotiate with lenders and loan servicing agencies to make loan modifications available to homeowners struggling against foreclosure. The federal government has made their displeasure known and has been working to secure commitments from lenders and loan servicing agents to complete a sizable number of loan modifications by November of this year.

According to a Sun Sentinel report written by Harriet Brackey and republished on HispanicBusiness.com on August 10, 2009, “five months into the Making Home Affordable program, the Treasury Department reports that only 15 percent of homeowners eligible for the loan modification program have been offered help. Less than nine percent have actually had their loans modified.” Newspapers throughout the nation, ranging from the Dallas Morning News to California’s Redding Record Searchlight to the McClatchy Newspapers describe the frustration of struggling homeowners as they find it exceedingly difficult to get productive responses from loan servicers, who complain that they are overwhelmed by borrowers seeking assistance.

Struggling homeowners aren’t the only ones that are feeling frustrated and angry by the failure of loan servicers and banks to do much loan modifying. The Department of the Treasury, according to an August 5, 2009, report published by Investment News, “expressed dissatisfaction yesterday with the number of trial loan modification initiated through July 31 and has asked the 38 loan providers participating in the federal government's Home Affordable Modification program to “ramp up” their efforts.”

In an unusual move, as reported by KPHO.com on August 19, 2009, “a federal bankruptcy judge has ordered a top Wells Fargo executive to testify in court about the bank's loan modification policies” in relation to court action set in motion by a Phoenix, Arizona woman’s difficulty in getting a loan modification from Wells Fargo.  Arizona Attorney General Terry Goddard is one of many state officials that are becoming more vocal in their displeasure at the difficulties their constituents are facing in getting the loan modifications they need to stop foreclosure. “We find the take up on the (homeowner assistance) program is pathetic. The banks just are not doing what has been asked of them,” said Goddard, according to the KPHO.com report.

What is being asked of them – the banks that received billions of dollars in TARP bailout money – is to, in simple terms, return the favor to the taxpayers who will bear the burden of the bailouts one way or another by reducing the monthly payment obligation of eligible homeowners. Loans, for example, that were made before 2009, that are at least 60 days past due, and fit Fannie Mae and Freddie Mac requirements may be eligible for modification.

On August 16, 2009, an article published by the McClatchy Newspapers reported that “the Obama administration has stepped up pressure on lenders and their mortgage servicers,” with such techniques as what writer Kevin G. Hall described as “monthly "name and shame" exercises, publishing data on the loan-modification efforts of about three dozen companies.” According to a August 4, 2009, Bloomberg.com report based upon information released by the Treasury Department, “Bank of America Corp. and Wells Fargo & Co. were the worst performers among the biggest U.S. banks in modifying loans.”

Hoping to change the dismally low percentage of homeowners actually getting the loan modifications they need to save their homes, the Obama administration has been working to secure commitments from lenders and loan servicers to, as reported by Bloomberg, have at least 500,000 loan modifications begun by November 1, 2009. The administration is also working to crack down on what has been termed abusive behavior on the part of some loan servicing companies, such as advance fees and illegal charges. According to an August 8, 2009, report by the Associated Press, “at least 30 loan servicers face litigation alleging illegal practices.” As reported by the article, JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp., and Citigroup Inc. all are currently facing increased scrutiny and lawsuits.     

While certainly there is plenty of frustration and anger concerning the slowness of lenders and loan servicers to do their part in governments efforts to keep troubled homeowners in their homes, there is good news. Federal and local officials throughout the nation are aware of the situation and are taking steps to see to it that loan modifications are done in a timely and efficient fashion, and struggling homeowners that continue trying to get the loan modifications they need may soon find that their efforts to keep their homes are not made in vain.