Major mortgage loan servicers showed improved results heading off foreclosures in September, according to a government report released Thursday, helping the Obama administration hit a key target ahead of schedule.
The Treasury said its Making Home Affordable program crossed the 500,000 loan-modification mark earlier this week, well ahead of its previously-announced target date of Nov.1.
The announcement came as the government released its third monthly report, documenting private sector participation in the $75-billion program, which was first outlined and launched with great fanfare in the spring.
Through the end of September, some 63 firms had signed onto the program, resulting in 487,081 trial modifications, up from 360,000 in July. Some 758,000 borrowers have been made offers so far.
In a statement, the Treasury said "trial modifications are now being issued at a faster rate than new homeowners are becoming eligible," but added "the administration believes that more can and should be done to assist struggling homeowners and to stabilize the housing market."
Data on success rates at this point is limited and in a way lagging. The program is barely six months old and its terms require that a modified loan stay current for three months to be considered a success.
JPMorgan Chase had the most underway as of September —117,196. Citigroup’s mortgage unit had modified 68,248 loans through Sept. 30, followed by Wells Fargo with 62,989 loans.
As CNBC.com first reported earlier Thursday before the release of the report, Bank of America had increased the number of customers with a trial mortgage modification by 62% in September to almost 95,000.
The bank, which recently suffered the surprise resignation of its longtime CEO Kenneth Lewis, also increased the total number of modification offers under the Home Affordable Modification Program to 156,120 last month, versus 125,338 in August, saying its overall efforts "continue to grow."
The government program also includes a refinancing component, which is meant to decrease the number of potential defaults. BofA says that as of September it has taken more than 144,000 applications in that category and funded some 60 percent of them.
BofA, which faces lawsuits and investigations by lawmakers and regulators over its takeover of Merrill Lynch, including a bonus scandal, last year, had been among a group of servicers who's efforts had been called into question at the beginning of the program.
After a slower-than-expected start, the government in July set an intermediate goal of 500,000 modifications by Nov. 1. (The initial goal was for 3-4 million in the first two years.) While acknowledging the usual start-up problems, White House officials still blamed servicers for the poor showing and asked them to redouble their efforts.
Industry and government efforts to contain the foreclosure problem are being thwarted by rising unemployment, which is squeezing homeowners, and forcing more to become delinquent.
Foreclosures continue to run at a record rate, despite a multitude of government and private programs. The problem has spread well beyond its original flash point, the subprime sector.
The Obama administration launched the massive Making Home Affordable Program in the early spring, replacing a Bush era one that was widely considered a flop.
In all, the government hopes to assist as many as 7 million to 9 million needy homeowners, through loan refinancing or modification. About 85 percent of the estimated 55 million outstanding mortgages are covered under the program.
BofA has some 875,017 loans classified as past due 60 days or more—a key measure of mortgage delinquency as well as a foreclosure barometer, according to the Treasury report. That number is the most in the nation.
The program is designed to help homeowners already in trouble (the loans have become delinquent) and those who may be heeded for it. Loan servicers receive a fee of $1,000 per loan modification. In addition, they receive a $1,000 a year for three years if the modified loan stays current.
The program also covers underwater borrowers, another growing problem.
Industry groups welcomed the latest data.
"The industry is optimistic that our multi-pronged efforts to keep homeowners out of foreclosure are working," said The Financial Services Roundtable, which represents mamy of the largest integrated financial services. "But much work remains to be done,"