Only 6% of trial modifications have become permanent or are likely to become permanent under the Obama administration's foreclosure program, according to data the Treasury Department plans to release on Thursday.
On Monday, Treasury officials gave servicers in its Making Home Affordable Program a preview of the data. The poor results come a day before the administration and servicers were to testify before the House Financial Services Committee on the modification program.
According to the data, 11% of trial modifications that were extended have been canceled; 49% lack some or all of the necessary documents to convert them to permanent loans; 33% have the required documentation but have not been converted, and 6% are currently slated for conversion.
Under the administration's modification program, servicers must complete three months of trial modifications where the loan was reduced to 31% of the debt-to-income ratio before a workout is made permanent. On Thursday, the Treasury will for the first time officially announce how many of those loans have become permanent. So far 650,000 trial modifications have been extended.
Servicers were allowed to accept verbal documentation of income and expenses but the borrower must provide verifying documentation before a loan can become permanent.