Although many banks have already received their portion of the $75 billion the government has allocated for the new Making Home Affordable plan, some mortgage lenders are moving so slowly to modify homeowners’ mortgages through the plan that homeowners fear they could still lose their homes to foreclosure, National Public Radio reports (“Homeowners Find Loan Modification Slow Going,” May 7, 2009).

“I faxed my loan-modification application six times to the two banks and everybody keeps saying, ‘We didn’t get your application yet, we didn’t get your application yet,’” says Dorothea Wang, a California homeowner who hasn’t been able to pay her mortgage since January and is about to default on her home loan with Wells Fargo. Wang says she’s called and left several messages with the bank, but nobody ever returns her calls.

“Unfortunately, that’s a true story and I hear it all the time,” says Yolandra McClinton, a Los Angeles Neighborhood Housing Services counselor. McClinton says this has been typical of mortgage holders since they‘ve become overwhelmed with the large number of homeowners attempting to get their loan modified through government programs.

Wells Fargo just received its $3 billion subsidy from the government to help struggling homeowners like Wang, but according to Ed Delgado, senior vice president of default and retention operations at Wells Fargo Home Loans, his company has been busy getting up to speed with the new program.

It takes time to roll out the “decisioning” software that helps lenders determine if homeowners qualify under the new program, Delgado says. Lenders use the software, in part, to determine if homeowners actually live in their home and if they spend more than 31 percent of their gross monthly income on their mortgage payment.

Those customers who meet the eligibility requirements, Delgado explains, would typically have the interest rate on their mortgage reduced for at least five years under the government’s plan.

Many industry insiders including Lori Gay, president of the Los Angeles Neighborhood Housing Services, believe that lenders are just too busy dealing with foreclosures and don’t have the time to help homeowners with mortgage modifications.

“Are they ready to make this a massive program yet, or do they need three months to get their systems in place?” Gay asks. “This is where people get lost in the cracks.”

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