Borrowers quitting mortgage aid

WASHINGTON — The number of homeowners dropping out of the Obama administration’s main mortgage assistance plan is growing, and is now almost equal to the number who have received permanent relief.

More than 299,000 homeowners had received permanent loan modifications as of last month, the Treasury Department said Monday. That’s about 25 percent of the 1.2 million who have started the program since its March 2009 launch. They are paying, on average, $516 less each month.

However, the number of people who started the process but failed to get their mortgages permanently modified rose dramatically in April.

To complete the program, borrowers must make at least three payments on time. About 277,000 homeowners, or 23 percent of those enrolled, have dropped out during this trial phase. That’s up from about 155,000 a month earlier.

Many borrowers are still stuck in limbo, unable to complete the process and caught up in a bewildering bureaucracy, housing advocates say.

“These mortgage companies have to get it together,” said Henrietta Thompson, housing coordinator with United Family Services in Charlotte, N.C. “We’re not getting anything done.”

Most analysts say the administration’s program has yet to make a dent in the foreclosure crisis, and critics say it is merely delaying an inevitable surge in foreclosures. But officials insist the program is helping the housing market turn around.

“The number of homeowners receiving significant relief through a mortgage modification continues to rise,” Phyllis Caldwell, chief of Treasury’s homeownership preservation office, said in a statement.

The program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Mortgage companies get up to $75 billion in taxpayer incentives to reduce borrowers’ monthly payments.