The Treasury's $50 billion loan-modification program is in danger of being swamped as the foreclosure crisis accelerates, the Congressional Oversight Panel said in a report yesterday. The Home Affordable Modification Program has met its target of 500,000 trial mortgage modifications started by November 1, but the watchdog warned that foreclosure starts are outnumbering modifications 2 to 1 as the crisis spreads from subprime to prime mortgages.
The panel called for the administration to expand the program to help mortgage holders with good credit who are losing their jobs and can't afford to make payments. It warned that defaults and foreclosures are set to soar as more homes go into negative equity. "Today, one-third of mortgages are underwater, and if housing prices continue to drop, some experts estimate that one half of all mortgages will exceed the value of the homes they secure," the report said.