Obama administration to expand housing plan

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Obama administration to expand housing plan

By ALAN ZIBEL, AP Real Estate Writer
Thu May 14, 11:20 am ET


WASHINGTON – The Obama administration expanded its $50 billion mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a foreclosure if they don't qualify for other assistance.

The new initiatives are expected to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner's credit score, but less than a foreclosure.

Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers' loans.

"We're seeing the first signs of homeowners being able to take advantage of lower monthly payments that the program makes possible," said Treasury Secretary Timothy Geithner.

While the number of success stories is growing, it pales compared to the rate of new foreclosures, and many housing counselors across the country are complaining that the Making Home Affordable is taking off slowly.

"Our experience at the ground level has been, so far, frustrating," said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.

There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.

He's going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.

"It's a long process, but I still have a little hope to stay in my home" said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. "I'm pretty happy."

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