Obama mortgage mods slow, hitting nearly 500,000

By Ben Rooney, staff reporterOctober 25, 2010: 4:29 PM ET

NEW YORK (CNNMoney.com) -- The government's main foreclosure-rescue program continues to show signs of slowing progress, according to a federal report released Monday.

There were 28,000 permanent mortgage modifications reported in September under the Home Affordable Modification Program, known as HAMP. That's down from more than 33,000 in August.

HAMP is designed to help eligible borrowers modify their home loans to make their monthly payments more affordable.

A total of 495,898 borrowers have received permanent loan modifications since HAMP was launched in 2009. Of that half-million homeowners, 11% redefaulted on their new lower-cost loans after nine months. After six months, less than 10% of modified loans were delinquent.

Banks start by offering trial modifications to see if homeowners qualify for the program and can afford the new payments. Nearly 1.4 million trials have been started thus far, with 35,297 of them happening in September.

Raphael Bostic, assistant secretary of the U.S. Department of Housing and Urban Development, said the Obama administration's efforts have helped "millions of families" stay in their homes, though he acknowledged that more needs to be done.

"With many unavoidable foreclosures still in the pipeline, it's clear that we have a hard road ahead," Bostic said in a statement.

Meanwhile, the HAMP program has influenced loan modification standards across the mortgage industry, according to Tim Massad, Assistant Secretary for Financial Stability.

"That has led to more than 3.5 million modification arrangements directly benefitting families in communities across the country still healing from the crisis," Massad said in a statement. 

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Tam Doan signed thousands of foreclosure documents at Bank of America, but he said, "I had no idea what I was signing." College costs continue to rise across the board, but tuition and fees are climbing at a faster pace at public schools than at private universities. Government hopes a new round of asset purchases will breathe life into the economy, but some experts warn it may translate into higher consumer prices. 

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