Treasury officials said Thursday that starting June 1, borrowers will be able to submit a streamlined package of documents,
including two pay stubs, to qualify for the Obama administration Making Home Affordable loan modifications.
If borrowers make their initial trial payments ontime, they will be give a permanent loan modification.
"This is not about not getting documents back and forth and the servers losing it," said Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office.
The focus of the revised rules, she said, is to help move the almost 1 million borrowers nationwide in trial loan modifications into permanent new deals.
Streamlining the process is good for borrowers and banks were having trouble with the paperwork as well.
JPMorgan Chase CEO Jamie Dimon was in Miami last week to announce big expansion plans for the bank. He said the pace of loan modifications
"is getting better," but he also alluded to the paperwork problems that lenders and loan servicers face. The biggest problem, he said, was verifying income.
I've been told by some lenders that if an employee gets overtime pay, for example, that borrower has to get a letter from his employer saying the intention is to
continue paying for overtime. That's a lot to ask. Even so, Dimon said the Obama loan modification system is not a failure and that the number of loans receiving
permanent modifications will improve over time.
At present, 25 percent of all mortgage loans that are behind have received any sort of offer of a modification. Within that group, only 14 percent have become a
permanent modification. That's for all lenders.
Loan modifications are supposed to be one way to head off foreclosure.
More than 441,000 Florida mortgages in foreclosure and payments are late on more than 422,000 Florida loans,
according to figures from the Mortgage Bankers Association.