Chicago loan modification approvals lagging behind demand

At Neighborhood Housing Services of Chicago, only about one in four people are getting help from the Obama program, said Michael van Zalingen, director of homeownership services.

About 30% are not being put into trial modifications for reasons including too little income or too much equity in their homes, van Zalingen said. The rest are in limbo, mainly because the banks say their applications are incomplete.

Certainly, banks have quickened the pace of loan modification approvals, van Zalingen said. His group secured 180 modifications for clients in the second quarter, but was able to help 400 in the third quarter. He expects that a total of 1,000 clients will be put into trial modifications by year’s end.

Still, the modifications are not keeping pace, van Zalingen said. NHS-Chicago will see 3,000 to 3,500 distressed borrowers seek help this year. “Loan servicers are offering trial loan modifications more often, but not anything like the need or demand,” he said.

Just how many modifications are completed depends on the servicer. Performance remains very uneven, as it has since the start of the program.

What’s becoming even more important is how many people in trial modifications receive permanent adjustments. The Treasury in September lengthened the trial period to five months, from three months, to give borrowers more time to send in their paperwork and banks to process it.
Source: http://money.cnn.com/2009/11/10/news/economy/obama_mortgage_plan/

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