The Treasury Department report found that 80% of homeowners who are technically eligible for the government's mortgage modification program under Making Home Affordable are actually ineligible. Only 900,000 homeowners, or less than 20% of those delinquent on their mortgages, qualify for the program. Critics argue the program is ineffective as it is only designed to help a small portion of homeowners and fell short of its original goals. Common reasons for ineligibility include the type of loan, the property not being a primary residence, monthly payments already deemed affordable, or the homeowner abandoning the property.

1. 80 Percent Of Homeowners Behind On Mortgage Ineligible
For Loan Modification Program
Less than 20 percent of homeowners who theoretically qualify for a government mortgage
modification are actually eligible, according to data released Monday by the Treasury Department.
Although roughly 4.6 million U.S. homeowners have missed at least two mortgage payments --
making them technically eligible for Making Home Affordable, the federal government's flagship
homeowner assistance program -- a whopping 80 percent of those borrowers cannot be helped by
the program. According to the Treasury report, just 900,000 homeowners actually qualify for a loan
modification under Making Home Affordable.
Dean Baker, an economist and co-director of the Center for Economic and Policy Research, said that
fact reflects the program's low goals. "If 900,000 are eligible, and this is your main program for
helping underwater borrowers, and we know that not all 900,000 can be helped, this doesn't look
very ambitious," he said.
The numbers reinforce just how far short the program, initiated by President Barack Obama with
much fanfare in early 2009, has fallen short of its goals and fuel critics' assertions that the program
is largely ineffective. "This program, in its design, is set up to help a very small portion of people,"
said Baker.
(Under Making Home Affordable, homeowners who aren't yet delinquent in mortgage payments but
are at risk of imminent default might also qualify for loan modifications. The Treasury data did not
include that population.)
Borrowers are locked out of the federal program for a myriad of reasons, including the kind of loan
they have and the property at issue. Not covered by the program: rental properties, "manufactured"
homes, homes with Federal Housing Administration loans, and homes with Department of Veteran
Affairs loans.
Many borrowers can't get help because their monthly mortgage payment is deemed affordable,
irrespective of whether it actually is for the borrower. The idea behind the loan modification
program is to make the monthly mortgage payment more affordable, defined as a payment that is
less than 31 percent of the borrower's total monthly debt payments (think car payments, student
loans, credit cards, etc.). One-third of homeowners who would otherwise qualify are ineligible
because they already have a mortgage payment that meets this criteria, according to the Treasury
report.

2. Borrowers who have abandoned their property are also ineligible, the assumption being that they
are not committed to their home.
"If you look at the large number of vacant properties, I think that speaks to the fact that, in many
cases, the borrowers were reached too late in the game," said Baker. "The borrower assumed they'd
lose their home so they walked away. You could say those people aren't eligible, but they might have
been if we'd reached them earlier."
Source: Treasury Department report.
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