More than 6,400 Georgians have loans modified

By Associated Press

For the AJC

Hundreds of thousands of homeowners nationwide are 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 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. Many analysts warn the majority of borrowers will never complete the process — or will fall behind again.

In Georgia, 39,648 homeowners have entered the program, with 6,468 having their mortgages permanently modified.

Only four states have had more mortgages modified than Georgia – California, Florida, Arizona and Illinois.

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.

Staff writer Paul Donsky contributed to this report.