The government will provide another $3.1 billion to a group of mortgage servicing companies as an incentive to modify loans to combat record levels of foreclosures.
The Treasury Department said Tuesday that the modifications, which included reductions in projected payments for some companies, pushed the total amount for the program to $18.3 billion, from $15.2 billion.
The department also added one company, Residential Credit Solutions of Fort Worth, Texas, to the program. It is scheduled to receive up to $19.4 million, and joins 15 other mortgage companies approved to participate in the program.
The biggest adjustment was made for Countrywide Home Loans Servicing LP, part of Bank of America Corp., which received an increase of $3.3 billion, bringing its total to $5.2 billion.
Treasury spokeswoman Meg Reilly said the original estimates were based on publicly available information. The revised estimates were calculated using more accurate data supplied by the companies. Further adjustments in the amounts available to the companies will be made on a quarterly basis, she said.
The administration announced in March that it would provide $50 billion from the $700 billion financial rescue fund as an incentive for the mortgage industry to modify loans at lower monthly payments. But the effectiveness of the relief plan remains in doubt, with questions lingering about how much the lending industry is cooperating. Many housing counselors say it hasn’t made much of a difference.
As of this week, more than 50,000 borrowers were enrolled in three-month trial modifications under the plan, according to the Treasury Department.
The administration last month expanded the program to provide incentives for lenders who streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.
The modifications announced on Tuesday were made last Friday. Under the law that created the rescue program last October, Treasury has two business days to disclose any changes in the rescue fund.
Copyright 2009 The Associated Press.