WASHINGTON - More than 40 percent of homeowners seeking help from the Obama administration's flagship effort to rescue those at risk of foreclosure have dropped out of the program.
About 530,000 borrowers have fallen out of the program as of last month, the Treasury Department said yesterday. Nearly 1.3 million homeowners had enrolled since March 2009.
Treasury officials say few of these borrowers will wind up in foreclosure. But many analysts are concerned that a new wave of foreclosures could greatly impact the struggling housing industry.
Another 390,000 homeowners, or 30 percent of those who started the program, have received permanent loan modifications and are making payments on time.
A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.
The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. But as of mid-May only $132 million has been spent out of a potential $75 billion, according to the Government Accountability Office.- AP