Hope Now Figures Call Program’s Effectiveness Into Question

New York—The Hope Now coalition says lenders have helped almost 1.2 million troubled homeowners—but it’s still not clear how successful Hope Now’s plan has been in helping people keep their homes, CNNMoney.com reports. Numbers released Thursday by Hope Now—which indicate the total number of workouts from July 2007 through the end of February—also show that…

New York—The Hope Now coalition says lenders have helped almost 1.2 million troubled homeowners—but it’s still not clear how successful Hope Now’s plan has been in helping people keep their homes, CNNMoney.com reports. Numbers released Thursday by Hope Now—which indicate the total number of workouts from July 2007 through the end of February—also show that almost 419,000 borrowers’ homes were lost to foreclosure.The Bush administration’s Hope Now group of lenders, investors and community groups divides its data into two categories: loan modifications–which include loan term changes such as permanent reductions to a loan’s principal or interest rates–and repayment plans, which offer borrowers time to make up missed payments.Repayment plans are typically not as helpful for borrowers in trouble who couldn’t handle their original monthly payments to begin with, says Federal Deposit Insurance Corp. Chairman Sheila Bair–and 848,000 of the 1,178,000 Hope Now loan aid packages were repayment schedules.Yet Hope Now has increased its amount of modifications, which are more helpful in helping people avoid losing their homes: Nearly 37 percent of the workouts in 2008 were modifications, compared to just 25 percent in 2007.However, Hope Now also labels temporary interest-rate freezes and mortgage extensions—often considered to be limited-relief solutions for troubled homeowners–as modifications, so not all of the 37 percent were principal reductions or interest-rate cuts.The plan’s effect on troubled homeowners is uncertain: According to the Mortgage Bankers Association, in the three months ended September 30, 40 percent of the subprime, adjustable rate mortgage borrowers who slipped into foreclosure had already tried to work things out with their lenders.