The percentage of homeowners dropping out of the Obama administration’s premier housing rescue program rose in July to nearly half of participants, as owners receiving aid continued to struggle with documenting their eligibility, the U.S. Treasury said on Friday.
In its monthly report on the Home Affordable Modification Program, the Treasury said 48.1 percent of the 1.3 million homeowners who started a mortgage modification through July have dropped out. This compares to a 41.2 percent dropout rate through June.
But the modification trials offered in the program prior to June 1 did not require up-front documentation of income or eligibility, and many trials are now being canceled.
As a result, Treasury said 100,114 participants dropped out of the program in July—more than four times the 24,577 new modification trials started.
“The number of new cancellations is expected to exceed the number of permanent modifications for the next few months as servicers clear their backlog of aged trials,” the Treasury said in a statement.
From the AP:
Nearly half of homeowners seeking help from the Obama administration’s flagship effort to help those at risk of foreclosure have fallen out of the program.
A new report from the Treasury Department says approximately 630,000 people who had tried to get their mortgages modified through the program have been cut loose through July. That’s about 48 percent of the 1.3 million homeowners who had enrolled since March 2009.
The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market.