The Number of Borrowers Waiting to Get Their Loans Modified Continues to Increase

According to the program of Making Home Affordable, the lenders get the taxpayer funds so that they cut down on the mortgage repayments to be made by the borrowers. This can be easily done by reducing the rate of interest against their loans. Some others might extend the period for repayment of the loans. The Treasury Department’s report featured that hardly 11% numbering to 95,000 borrowers in Bank of America are felonious and they are the only ones who qualified for the program of modification of the loans. Comparatively, in J.P. Morgan Chase this figure was 27% or 117,000 borrowers and in Citigroup the percentage is 33% amounting to 68,000 borrowers. Moreover, the figures for Morgan Stanley owned Saxon Mortgage Services is 41% approximately amounting to 32,000 borrowers.

Ken Scheller, the senior vice president in the home retention segment at Bank of America observed that, “We’re sure working hard. We don’t want to be down there.” He further emphasized on the fact that the bank apparently altered 215,000 mortgages. These modifications were done out of the realm of federal program. This also included some of the settlements worked out with the attorneys general in relation to the subprime loans that the Countrywide Financial had issued. Countrywide Financial was taken over by the Bank of America in 2008.

According to the industry officials, among the 62 lenders contributing in the federal program were also ramping up. According to the Wells Fargo records, the volume of calls tripled as soon as this program was announced in the month of February. This forced the company to hire at least 5,800 employees more just to manage the requests from borrowers applying for loan modifications. Citigroup was no exception, as they had to increase the number of from 450 employees to 4000 and above to handle their loss-mitigation segment early last year. According to the observations of Mark A. Calabria, an Cato Institute, financial regulation expert, “This was a much bigger wave than the lending industry was expecting.”

The Bank of America seems to face more problems primarily as, its cases of mortgage and faulty borrowers increased greatly as it gained Countrywide according to the observations of the analysts. The loan portfolio of Countrywide featured risky mortgages coupled with faulty borrowers. The crisis of foreclosures has aggravated even after the Treasury officials tried to control the financial institutions through numerous programs in the month of July. Due to the increasing rates of unemployment, increasing number of borrowers is falling behind with their repayments as observed by the economists. At least 4.4 million among the borrowers are homeless since the crisis commenced from 2007 and the Moody’s Economy.com observes that approximately another 2 million are going to lose their homes in 2009.

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