The federal program is meant to help struggling homeowners at risk of default or already falling behind on their payments to modify their loans to terms they can afford to pay. The program was introduced in 2009 for loans backed by Fannie Mae and Freddie Mac.
Qualified homeowners in the program are put on a 90 day trial modification. If they can make the payments during the trial period, their modification is converted to a permanent one, Fifth Third.
The national average rate to convert temporary modifications to permanent modifications is 55 percent, according to Fifth Third.
“What the big deal is that most plans fail during the trial period, which is 90 days,” said Tom Stoll, Fifth Third’s senior vice president of residential mortgage lending. “It’s all based on that front end work on did you uncover the real issues and are you able to work on a plan that’s going to work?”
The people who successfully modify their loans are people who might otherwise have been foreclosed on, Stoll said.
“It’s a big deal for what it does for home values if these don’t end up in foreclosure,” he said.