Attempts to get lenders to modify loans for troubled homeowners have so far not done much to revive the housing market.  Now, the Obama Administration’s effort is “absolutely under way,” according to a Treasury official.  Officials hope their $75 billion sweetener from the Troubled Asset Relief Program is enough incentive for lenders to modify millions of loans. 

Foreclosure prevention efforts began with Bush Administration programs like FHA Secure, Hope Now -- and Hope for Homeowners, which is nearly 400,000 modifications short of its 400,000-modification goal. 

The Obama Administration’s plan is costly and designed to have the lender reduce mortgage payments to no more than 38% of a troubled borrower’s gross income. The second phase involves Treasury stepping in with TARP money to reduce payments to 31% of the borrower’s income.  Treasury will share half the cost of that reduction with the lender. 

Three major mortgage servicers are now testing the program in what Treasury Department officials call a “trial period."

-- JPMorgan Chase (JPM) has qualified several hundred borrowers for trial modifications.  These borrowers have to demonstrate they can pay for three months to be eligible for a permanent modification.  JPMorgan Chase has notified more than 165,000 customers that they may qualify for loan modifications under the Obama Administration’s plan.

--Wells Fargo Home Mortgage is reviewing more than 200,000 customers who may be eligible for loan modifications.  Starting next month, Wells Fargo (WFC) will include modification information on the statements it sends to delinquent customers.

-- Citibank (C) trial modifications are under way.  Roughly 15,000 customers have scheduled phone appointments to discuss the modification program.

The trial period is a significant test for borrowers, who must demonstrate they can afford their reduced mortgage payments. If not, the new Administration will find itself with the success rate of the old plans.

COMMENTS EMAILED TO FOXBUSINESS.COM

I purchased a home in AZ in May of 08; I am sure the value of the home has dropped. That being said, I just spoke with my mortgage company and was told I could not refi due to the fact that I pay PMI (I only put 10% down) do you or could you (FOX Business) comment on when or if people who put down less than 10% will be able to refi. (I am current and never have been late on my mortgage). This leaves a large population out of the option to refi.
thank you for your help.

- Billy, Arizona

How do people receive these re-finances and mortgage modification? Three years ago I bought a small home we could afford and pay the mortgage every month as a responsible homeowner.
In July of last year I lost my job, my husband is disabled. I contacted the credit union where I received the mortgage, discovered I had a Fannie Mae. I was told this week that Fannie Mae would not consider modifying my mortgage until I had been unemployed for three years! I’m told that there is no mortgage modification or re-financing available to me. Perhaps I should have bought a $500,000 house instead of one I could afford at the time? I’m not asking for a ’bail out’ I would like a modification. Or perhaps I don't fit the new administrations guidelines?

- Nancy, Indiana

Just off the phone with B of A re: switching back to my 30 yr. fixed 2d (which they call a line of credit but treat as a secured interest in residential property) after in '06 I switched to an ARM on the advice of customer service who said switching back would be automatic if I chose to do so.
Two years later I call back to go back to fixed even though my ARM is at 3.99 as I can foresee it going up. I was told that there were two criteria for doing this:

1. Loan to Value AT TIME changed to ARM i.e. 2006
2. At rate determined by the bank

The bank decided that rate is 10.74%!!!
Because this is a 2d no loan modification allowed.
Help the consumer with this....Give us all some help with this.

Thanks,
- J

I read that mortgage loans (loans for purchases of new homes and loans to refinance existing mortgages) jumped 64% in the fourth quarter of at Wells Fargo.
I live in Nevada. Wells Fargo has many of its branch offices in Nevada and California. Wells Fargo claims that a majority of these mortgage loans were refinance loans. How in the world are we supposed to believe that? Nevada has "For Sale" signs, sticking out like a sore thumb, in front of homes that people and banks are looking to unload. Even if I could refinance my existing mortgage, at say an interest rate that is 3% below the rate that I am paying today, what good would it do me to refinance my mortgage if the value of my home has fallen say $100,000 below the price that I paid for it? Many home buyers didn't have to put any money down when they purchased their home. Therefore, we have negative equity when it comes to the homes that we own. It would make much more sense to just abandon the home!
This is the exact situation that many residents of California and Nevada are facing today. Therefore, who are these people that decided to refinance their mortgages? They are not the people that I know, who live in California and Nevada. That is where Wells Fargo does a good chunk of their business.

- David, Nevada

This flyer came in the mail yesterday from Wells Fargo. Aren't these loan offers creating the same problems that homeowners and mortgage companies are now dealing with our taxpayer bail outs?
- Jim, Arizona