Editor's note: This is the first part of a series examining the government's "Making Home Affordable" program and the struggles of homeowners seeking a mortgage-rate modification. Check back Thursday for the second installment.
The $275 billion "Making Home Affordable" program had the potential to reach up to 9 million troubled homeowners, according to initial estimates. Instead, paperwork delays, confusion over eligibility requirements and hesitance of banks to participate has left millions out in the cold. Just 24% of borrowers eligible for a federal mortgage-modification program have received permanent mortgage modifications. While 1.6 million homeowners were eligible as of the last report, more than half a million had abandoned the program, seeking other solutions or falling victim to the housing market's collapse. Since its inception in February 2009, nearly 6 million homes have received foreclosure filings, according to RealtyTrac -- despite a foreclosure-moratorium that predated the program and lasted through March. In desperation, homeowners have handed millions of dollars to shysters promising fast-track solutions. No less than five federal agencies and attorneys general in more than 30 states have taken action against thousands of such individuals. Yet the government response has been uncoordinated and unhelpful to those who most need assistance. The banking industry has taken a woefully long time to help its customers. Yet solutions implemented by the industry have been more effective than the government's: 89% of homeowners who have gotten permanent modifications have done so through banks' proprietary programs. The complexity and haphazardness of the mortgage-modification process has already frustrated millions of homeowners across the country. The backlog of homeowners requiring assistance has climbed as unemployment remains stubbornly high. False starts have threatened the progress of an economic recovery that now appears to be dangling by a thread. 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