WASHINGTON — Hundreds of thousands of homeowners are in limbo waiting to find out if they will be accepted for the Obama administration’s foreclosure prevention program.
Nearly 1.1 million borrowers have enrolled in the program since it started a year ago, but so far only about 170,000 homeowners have completed the application process, the government said Friday.
At that rate, just 16 percent, the program will have a minimal effect on the foreclosure crisis. And many analysts have warned that the majority of borrowers will never complete the process — or fall behind again.
To receive a permanent loan modification, homeowners need to make three payments and provide proof of their income, plus a letter documenting their financial hardship. To date, about 90,000 borrowers have dropped out.
The program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years.
To entice mortgage companies to participate, the government has set aside $75 billion in subsidies, though less than 1 percent has been spent.
Homeowners in two California metro areas — Los Angeles and Riverside — have received the most help, with a combined 18,000 homeowners receiving permanent modifications. But only 3,900 borrowers in Las Vegas had completed the program as of last month, a dismal showing in a city hard-hit by the foreclosure crisis.
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