Survey: Mortgage servicers back Obama plan

Mortgage servicers who handle more than three-fourths of the nation's home loans intend to participate in the Obama administration's mortgage-modification program, according to a survey by the nonprofit group Acorn.

Many of the largest servicers, including Bank of America Corp. and Wells Fargo & Co., said they had already begun implementing the program, even before the Treasury Department issues contracts that will govern its details, according to the survey.

But other servicers say they are continuing to proceed with foreclosures on properties expected to be eligible for the loan modifications.

Acorn said the survey results boded well for the program. More than two-thirds of 34 servicers nationwide responded to the written survey, the group said, and while some said they were awaiting contracts before implementing the plan, "not a single mortgage servicer has decided against participation."

"It's excellent evidence that the program will work," said Bruce Dorpalen, national director of housing counseling for Acorn Housing, a sister organization that provides assistance to distressed homeowners.

The program President Obama announced last month, Making Home Affordable, is aimed at slowing the rate of home foreclosures, which have risen sharply since the bubble in housing prices began to deflate in mid-2006 and the economy fell into recession at the end of 2007. Acorn said that last year, 2.3 million homeowners received foreclosure notices, a record since the Great Depression.

To stem the foreclosure tide, the program will offer up to $75 billion in subsidies and incentives to lenders or mortgage servicers who agree to modify or refinance eligible loans.

Acorn Housing recently completed its first modification under the Obama program, Dorpalen said, arranging new terms for a Glendale, Ariz., construction worker on his loan with Citi Mortgage.

He said Citi cut the interest rate to 2 percent and extended the loan's term to 40 years to meet the program's affordability target: total monthly loan payments of 31 percent of the borrower's gross monthly income.

Vicki Vidal, associate vice president of the Mortgage Bankers Association, said some servicers remained concerned about issues affecting their agreements with investors that own the underlying loans, sometimes through complicated mortgage-backed securities. Acorn said yesterday that some servicers feared lawsuits.

"A lot of people are very interested in the program and very excited about the program," Vidal said. "But there are lots of details still to be provided."

Rick Simon, a spokesman for Bank of America, which services about $2 trillion in mortgages, said the bank welcomed the subsidies to cut monthly payments to an affordable ratio.

"We think that's the key to making sure there's a sustained opportunity for homeownership by the borrower, and that they'll be less likely to re-default," Simon said.

To see the results of the Acorn survey, go to www. acorn.org. For information on loan modifications, call Acorn Housing at 215-765-1221 or 1-888-409-3557 or go to www.acornhousinghelp.org.