March 30, 2010

Do I Qualify for a Loan Modification?

Posted in Loan Modification tagged at 12:17 am by demetriagraves

Are you financially on the edge? Just barely making the house payments by pushing off other payments? Is your house now worth less than what you originally paid?  You may qualify for a loan modification and it may be just what you need to balance the family books.

Outlined here are the key factors that you should know about loan modifications, especially in regard to what is needed to qualify.

1. Firstly, you must occupy the property, it must be your primary residence and it must be four units or less. Yes, duplexes and quads qualify, although most people applying have single family residences. The federal government is trying to assist home owners, not investors and they will verify the primary residence based on tax returns, utility bills, and credit reports.

2. To be eligible for a home modification, the first mortgage must have originated prior to Jan. 1, 2009

3. The current monthly mortgage payments must be greater than 31 percent your gross income, which means just about everyone qualifies on this point.

4. You’ll need to present evidence of a financial hardship, which is most often the loss of an income, but could be loss of overtime, furloughs, etc. Another point that isn’t hard for most people to prove.

5. To qualify for a loan modification your loan amount needs to be less than $729,750. The federal government wants to offer modifications on homes that are not considered excessive loan amounts.

6. Finally, the Making Home Affordable (HAMP) Program will end. The federal government’s current plan will be allowing for new borrowers to be accepted until December 31, 2012.

As you can see, MANY people qualify for a loan modification!

If you have further questions about qualifying for a loan modification, please don’t hesitate to contact me for a free initial consultation. I can go over your individual circumstances in more detail and help you work out a solution that is best for you.

March 24, 2010

Choosing Bankruptcy or Foreclosure? STOP!

Posted in Bankruptcy, Forclosure, Loan Modification tagged , , at 6:44 pm by demetriagraves

If things are getting tight and you think it is a choice between losing the house or declaring bankruptcy, I have news for you. You have other choices and you should avoid bankruptcy if possible! It is widely acknowledged now that less than 5% of people who file for bankruptcy actually avoided the compounded pain of foreclosure.  Avoid getting stuck with both a foreclosure and bankruptcy, try for a loan modification immediately!  If you qualify, it may save you from both these fates.

A home loan modification is the process of restructuring your current mortgage into a mortgage that is more affordable. This means that the terms of the loan change, but the lender remains the same. Modifications to your mortgage generally involve the reduction of your interest rate to make the monthly payments more affordable. In many cases, a loan modification is the only way for homeowners who are unable to refinance to avoid default or foreclosure.

Most know that a foreclosure or a bankruptcy will put their credit in poor standing. Often people tend to think a loan modification would affect them the same way.  Previously a loan modification may have negatively affected your credit, but this is not necessarily true of the current economic times.

In today’s economic crisis the government, and credit companies, are being forced to reevaluate this process.  The government in fact, has encouraged credit bureaus to start using a different code when showing loan modifications in order to give the consumer a break on their credit score.

The government has tried to enforce rules in the last year or so to make it so that a loan modification does not strongly impact your credit in a negative way.  While some credit bureaus or financial institutions may not follow suit as well as the feds would like, the fact remains that a loan modification may not impact your credit as much as it may have in the past.

The reason for this change was so that the government could encourage more people to get loan modifications so they would in turn have a greater chance of keeping their homes…and lives, intact.  So if a loan modification might help it would definitely be worth your time to consider it, regardless of what you have heard about your credit.

Loan modification is not something you want to do just because you want to do it, but it is definitely better for your short and long term goals than a bankruptcy or foreclosure.

In today’s economy, the answer to many people’s financial woes is to get a loan modification.  However, many people feel they may not qualify for the loan modification, or even worse, don’t apply because they believe it will affect them negatively.

Unfortunately there are home loan modification scams, so homeowners need to be aware of this. I recommend using an attorney who is experienced in handling loan modifications. They are used to dealing with many lenders and know exactly what it takes to get your loan modification approved. All major lenders do offer loan modifications. Some of the smaller companies or hard money lenders may not, but generally speaking, the well-known lenders will all offer modifications. Homeowners should begin considering a home loan modification once they’ve fallen into a state of financial hardship.

The truth is that the process of modifying your home mortgage may be stressful. The same could also be said about going into foreclosure or bankruptcy. So this is why you need an experienced attorney to guide you through the process and advise you on your best options. I offer a free confidential initial consultation, where you can get all your questions answered. Please don’t hesitate to contact me as I’m here to help.

Recognizing Loan Modification Scams in California

Posted in Loan Modification tagged at 6:39 pm by demetriagraves

There has been a lot of media attention recently on the increase in scams regarding loan mods. Unfortunately, those who are most likely to be targeted are the elderly, anyone entering foreclosure, people who have recently lost their jobs, families who have lost a loved one, people who have limited knowledge of English, people with limited resources, and homeowners whose payment amounts have recently been raised.

You need to read this, even if your home is safe. A friend or relative who is not so fortunate may come to you for advice, and this will help save their home and your friendship!

The moment someone enters foreclosure, it not uncommon for them to be inundated with offers of help from many individuals with important, legal or governmental sounding names, some even claiming to have references from neighbors and nearby churches.

The person who will approach you in this type of scam is, more often than not, well-dressed, well groomed, and seems personable, kind, and trustworthy. Some will put you at ease by representing themselves to be of the same religion, to have been in the military, and others will claim to be working for non-profit organizations, or even some branch of the government.

These are some of the most common scams and what you can do to avoid being a victim.

1) The Disappearing Foreclosure Consultant – With a helpful sounding name and armed with references and a kind voice, the person who contacts you promises to help you stave off foreclosure with just an up-front fee for their time. The only problem is, as soon as the check clears their bank, you never see or hear from them again. The soon-to-be phantom performs little or no service, takes your money and you are left with your original problems and less time to try to save your home from foreclosure.

2) Loan Modification Helpers – Unlike Santa’s Helpers, in this scam you pay a fee up front to the “loan modification expert” to negotiate directly with your bank, only here you don’t get a present from Santa. If the expert really gains your trust, you also make your mortgage payments directly to the expert rather than to the mortgage company. Both the up front fee and the mortgage payments go directly into the pocket of the loan modification helper with the white beard and the kind voice and by the time you receive notice that your house is in foreclosure, this elf has disappeared and is back at the North Pole.

3) Just Sign Here Scams – As you face the prospect of foreclosure, one offer of help seems far better than all the others because it allows you to stay in your home as they save it from foreclosure. Unfortunately, in the papers you sign without having a lawyer look at them, you agree, knowingly or unknowingly, to sign over the ownership of the house and still remain responsible for the mortgage payments. This person either then sells your house, collects other fees from you or holds onto the house and evicts you.

4) Sale and Leaseback Scams – In this scam, if you are a homeowner who still has some equity in your home, you will be convinced to sign over title in your home and pay rent to the scam artist with the promise that they can bail you out, cure your problems and that you will be allowed to buy back the house later at a bargain price. All of this can be accomplished, but only if the property is in the consultant’s name. The payments you make go directly to the scam artist and eventually you will find yourself holding the bag. You may also find yourself evicted when you can no longer make the excessive rent payments. If you have lost your job and are having trouble making your house payments, even if you have equity in your home, you may be tempted by this scam. And while you would be entitled to the excess equity in your home if the house is sold in foreclosure, when you fall victim to this scam, you will lose the equity when it is either sold out from under you or the equity is stripped away by the new owner.

5) The Trust Me, I’m Religious or I Was In The Military Too Scam – These people posing as Christians, former members of the military or members of whatever social organizations you belong to come complete with references from members of your church or with military haircuts and promise that by adding them to the title to your home, they can rescue you from foreclosure, and have your credit repaired. Having gone through your mail or your trash, they probably know all about you. There’s no need to see a lawyer, they tell you. Just pray with them or have a drink with them and swap military stories. Just be sure to hold on to your wallet, don’t give them any money and don’t sign anything.

6) Sign Me Up Scotty And Get A New Loan Scam – In this scam, you are told that if you add the nice looking Good Samaritan onto your title by signing a Grant Deed or other legal instrument, (which you are told, you don’t really need to read) this friendly person can apply for a new loan, which, unfortunately, if approved, will leave you on the hook for both the old loan payments and the new loan payments, and any up front fees you pay for this service will disappear with this fraud.

7) Buy My Books, Take This Seminar And Make Millions Scam – You may see this offer on late night television, on roadside signs or even on billboards. Only this time, you are talked into buying materials that are full of worthless information that will do nothing to help you avoid foreclosure. Even worse, the materials you receive may offer advice that will land you in jail by telling you how to approach others in foreclosure and advise them that you can save them from foreclosure. The trouble is, what you will be doing is either practicing law without a license or acting as a credit repair agency or loan modification expert without a real estate license and without an advance fee agreement approved by the Commissioner of the California Department of Real Estate and without being registered with the California Department of Justice.

8)The Short Sale Scam – In this scam, the “short sale specialist” who contacts you promises his expertise to accomplish a short sale in a small amount of time that will protect your credit. There is a fee of course that would have been better spent on groceries. When the real estate market was better, there were additional wrinkles to this scam that today are more difficult to perpetrate due to the difficulty of selling homes in this economy.

9) It’s Like Magic – Here the homeowner is told to sign one thing, but the homeowner winds up signing something else altogether. In some instances of this bait and switch scam, the scam artist will serve as the notary as well. In conjunction with this and other scams, or in other variations, forgery may be utilized, and identity theft could be employed as well.

As you can see from the above examples, the current financial crisis has brought a lot of scammers into the loan modification, short sale and foreclosure arena and you really need the expert advice of an experienced attorney. I always apply the old saying of, “If it sounds too good to be true then it probably is!” I offer a free confidential initial consultation, where you can get your questions answered and I can help put you on the right track, so you don’t end up a being a victim.

March 18, 2010

Top 10 Questions about Loan Mods

Posted in Loan Modification tagged at 5:58 pm by demetriagraves

Let’s face it; times are tough for everyone these days. On the top of the list are homeowners struggling with their mortgage payments as well as other financial hardships. The loan modification process can be frustrating and confusing for many distressed homeowners. This is why having expert advice is so important, plus many of my clients have asked me to provide some basic information up front. To help you understand how the process works and what to expect, here are the Top 10 Questions I get asked about Loan Mods and some simple answers:

1. What exactly is a loan modification?

A loan modification is a permanent change in one or more terms of a borrower’s home loan, allowing the loan to be reinstated, and resulting in a lower payment the homeowner can afford.

2. Can the lender include late charges in the Loan Modification?

According to HUD (US Department of Housing and Urban Development), the accrued late charges should be waived by the lender at the time of the loan workout. This varies depending on the type of loan, but it’s wise to always request a complete breakdown and description of all fees and penalties from the lender.

3. Can the bank require an interior inspection of the property if they have concerns about its condition?

Yes, the lender may conduct any review it deems necessary to verify that the property does not have physical conditions which might adversely impact the value.

4. How do I know if I will qualify for a loan modification?

The main criterion your lender is looking at is your ability to make the new modified payment now and in the future. The lender needs proof of your income and a complete and accurate financial statement detailing your income and expenses, to show them that, if granted the modification, you will be able to afford the new, lower payment.

5. Do I have to be currently delinquent on my payments to get a loan modification?

Most lenders are now accepting applications from homeowners who are not currently delinquent, but who are able to prove to their bank that due to imminent interest rate increases or other factors, they will no longer be able to afford the loan payment under the terms of their loan. It is advisable to contact your lender as soon as possible to start the loan modification process, whether you are delinquent or not.

6. What is an acceptable Hardship situation?

Each homeowner has a unique set of circumstances that caused them to fall behind on their home loan, but generally the lenders consider divorce/separation, loss of income, death of spouse, co-borrower or family member issues, illness, job relocation, or military service to be acceptable reasons to consider a loan modification. A compelling hardship letter is a very important part of a successful application.

7. Will a loan modification help me stop foreclosure?

Yes, that is the goal. By working with your lender to find a loan workout solution, your loan is brought up-to-date and the foreclosure process is halted.

8. Can my missed payments be added back into my new loan modification?

Yes, the missed payments can be added to the new loan balance and spread out over the term to allow the loan to be brought up-to-date.

9. What are the advantages of having an attorney represent me?

An experienced attorney knows your legal rights and is experienced in dealing with many lenders. A good attorney knows what it takes to get your application approved. Do you really want to risk losing your home by not getting the right legal advice? Beware of loan modification companies that require a substantial up front fee, as unfortunately there are many scams to do with loan modification.

10. So how do I get started to modify my loan?

Before contacting your bank’s loss mitigation department or a loan modification company, I’d recommend that you contact me for a fee initial consultation. So you can learn as much as you can about the loan modification process, and you can make informed decisions. There is a lot of information online about loan modifications, but it can be difficult to get all the information you need in an easy to understand format. I’m here to answer all your questions and give you as much support as you need.

March 13, 2010

More About Mortgage Loan Modifications

Posted in Loan Modification tagged at 3:07 am by demetriagraves

If you are having a hard time meeting the monthly payments on your mortgage, then it might be time to find out more about a mortgage loan modification. Common reasons for needing a loan modification include; a loss of income, a lay-off or reduction of work hours, divorce or separation, a business failure, a death in the family, unexpected expensive medical bills or prolonged illness, a payment increase on an adjustable rate mortgage, or any number of tough financial problems.

Loan Modifications are primarily open to homeowners in default and those who are risking imminent foreclosure. With a loan modification the idea is to persuade the lender to change the terms of the loan to prevent foreclosure proceedings.

If you are a homeowner facing foreclosure, finding an experienced attorney to provide assistance is vital. Not only is an attorney more capable of negotiating a loan modification, but they can examine all the documents and help make the right decisions for you. You will be responsible for providing all the necessary paperwork and completing the required documents as requested by your attorney. The idea is to save your home and keep a roof over your head, so having an experienced attorney is vital to guide you through this process.

A mortgage loan modification might bring a lot of advantages, particularly an Obama loan modification. These are specifically designed to address those parts of a mortgage that are the most troublesome. Once those are handled, the prospects of success are greatly enhanced. It starts with reducing monthly payments and a lower interest rate. The purpose of changing the terms of a loan is to make the rates more affordable, thus protecting the lender and the owner from potential problems such as foreclosure.

Unlike refinancing, qualifying for a loan modification does not require any fees to be paid to your lender. If one manages to meet the loan modification criteria, your lender will “modify” the terms of the loan. The important thing is that you demonstrate to the lender a situation of financial hardship, soliciting the changing of the loan terms. Upon proving your situation, the lender will need to assess your financial future and obtain a guarantee that you will be able to meet the new payments.

Mortgage Loan Modifications will be based on the current market interest rates when the Mortgage Loan Modification is completed. The date used to determine the interest rate on or loan will be the date that lender approves your Mortgage Loan Modification. Your lender will recalculate your home loan by adding any payments you missed over a 360 month period in most cases.

It has been stated that the banks will no longer take loan modification applications after 2012!! If your loan is from Fannie Mae or Freddie Mac it is estimated that you have until July 2010!! to try to get a mortgage loan modification, so time is running out. Remember you can only apply for a mortgage loan modification if your home is worth less than $729,750.

February 1, 2010

Loan Modifications are Increasing Canceled Foreclosures

Posted in Forclosure, Loan Modification tagged , at 1:39 am by demetriagraves

I’ve recently come across some information that suggests that Loan Modifications are starting to reduce the number of homes that end up in foreclosure. The amount of California foreclosure cancellations increased 26.5% in December to 13,243, primarily because of loan modifications.  Plus, for the first time the number of canceled foreclosures in California overtook foreclosures reaching real-estate owned (REO) status.

In December 2009, the amount of foreclosures heading back to the banks, REO, dropped 11.9% from the previous month to 12,437. It looks like significant declines in foreclosure discounts by lenders drove the decrease in sales to third parties. Lenders discounted the opening bid on foreclosure auctions on the courthouse steps by nearly 40% for most of 2009, but in December lenders offered only 33.7% discounts.

Given the amount of pressure servicers face to complete more modifications under the Home Affordable Modification Program (HAMP), it should follow that more homeowners should be able to stay in their homes.

Under HAMP, the US Treasury Department provides capped incentives to servicers for the modification of loans on the verge of foreclosure. According to the latest report from the Treasury, there were 30,000 permanent modifications up to November 09. Previously many banks had been focusing on collecting documents. It seems that now more lenders are converting more loan modification trails into permanent modifications.

The timing of the increase California foreclosure cancellations, may be related to a required one-year delay before a foreclosure sale.

These numbers may not mean much to someone who is having difficulty keeping up with their mortgage. The main thing that I would like to emphasize is that there is help available and if you find yourself in a difficult circumstance with your mortgage, please seek some advice, sooner rather than later. There are many options available to you and it looks like many California Homeowners who have been on the verge of foreclosure have been able to take advantage of some of the programs available that can help to keep you in you home.

If you have further questions or would like some advice in this area, please don’t hesitate to contact me. I offer a free confidential initial consultation, where you can find out what you need to know and what your options are. There are many choices available, let me help you work out which option is best for you.

January 26, 2010

Loan Modification Vs Short Sale

Posted in Loan Modification, Short Sale tagged , at 2:13 am by demetriagraves

When a homeowner is faced with an unaffordable mortgage payment there are two principal choices for the homeowner in today’s market to avoid foreclosure. These are either a loan modification or a short sale. I offer advice for clients in this situation and can help you work out what are your best options, whether it’s a short sale or a loan modification or something else. Many of my clients have asked me for a brief explanation of what’s involved in either a loan modification or short sale. In this article I’ll explain each and go over some of their pros and cons so you can get a better picture of which one might be best for you. Though, don’t forget I’m here to help you out with both of these, so don’t be discouraged as I can offer you expert advice on which option is best for your individual circumstances.

Loan modification:

A loan modification is best for homeowners that have a temporary financial hardship or have an adjustable rate loan, finding themselves unable to make the loan payments under current terms of the loan. A loan modification focuses on changing the interest rate or length of the terms of the loan (extending it up to 40 years) to make the current loan more affordable.

Reduction in the amount that is owed rarely occurs. So if you are upside down in your mortgage – you will remain so. In high foreclosure states such as California, Nevada, and Florida which have experienced a significant price drop, homeowners may find themselves with negative equity that may take years to recover. A loan modification will not solve this issue and some may be forced to do a short sale anyway if they need to sell in the future. There are some significant drawbacks to loan modifications, so choose carefully and get some legal advice before you pursue this approach.

Here are some little known facts about Loan Modifications:

1.53% of all loan modifications fail after 6 months
2.Strict qualifications may not make you eligible
3.Most loan modification companies charge money and offer no guarantees
4.You will remain upside down on your mortgage if you currently have no equity
5.Interest rates are fixed for only 5 years – subject to future inflationary rates
6.33% of all loan modifications result in HIGHER payments
7.May or may not result in reduced interest rate and loan terms

Is a short sale for you?

The short sale of a home is most appropriate if the home is truly doesn’t make sense to keep, with either unaffordable payments, or significant negative equity. Job loss, reduction of income, illness, divorce, or just a bad loan, are all valid reasons that homeowners are selling today. When the house is worth less than the mortgage balance, the sale of the home will not pay off the existing debt. One of two scenarios must happen: 1) The homeowner comes out of pocket to pay the shortfall amount for the existing debt to be extinguished or 2) The existing mortgage holder (bank) agrees to take a loss on their debt to allow the home to be sold, granting a short payoff. This is known as a short sale.

With the high negative equity situations, banks are electing to grant the short sale to sell the house. The banks are not required to do this -their other choice when homeowners have stopped paying them, is to foreclose. Ultimately if the financial numbers work, it may be cheaper for a bank to short sale rather than foreclose.

Why a Short Sale?

1.Enables the sale of the house without money coming out of pocket for closing
2.Allows for financial recovery during the short sale process
3.Releases you from your negative equity (upside down) position
4.Capitalizes on the bank’s current motivation to grant a short sale
5.May forgive taxes owed from the short sale
6.Provides quicker credit recovery than foreclosure
7.May allow you to buy another home at today’s bargain prices!

Closing Short Sales can be tricky – banks don’t make it easy. Most successful short sales are done using a team of real estate experts, but most importantly, a professional bank negotiator should be on the team. Nine out of ten unsuccessful short sales (ending in foreclosure) generally are real estate agents trying to negotiate their own deals. So once again make sure you get the right advice and know who you are dealing with. I offer a free initial consultation to anyone who would like further help in this area.

December 3, 2009

Banks Looking Forward to Getting their ARMs Twisted by President Obama

Posted in Forclosure, Loan Modification, Uncategorized tagged , at 7:23 pm by demetriagraves

There’s been a lot of speculation about President Obama’s new plan of additional measures to reduce the increasing number of foreclosure casualties. His improved plan is supposed to be announced in more detail soon. It is expected to include more government subsidies for reducing a borrower’s interest rate, which a lender would have to match with their own money. This could reduce payments by several hundred dollars a month.

While some 650,000 people have had their mortgage payments temporarily adjusted, only a fraction of these, around 1.26% have received permanent modifications after three months. Exactly what kind of pressure Mr. Obama could bring to bear remains unclear.

It seems like it’s been a struggle to receive a permanent modification, there has been pressure on banks to provide temporary modifications but who will receive permanent help will be the real test. Currently borrowers who receive permanent modifications can keep making the lower payment for five years.

By the end of 2008, slightly more than 9 percent of all mortgages in the United States were either delinquent or in foreclosure, according to the Mortgage Bankers Association. The number of loans in foreclosure hit a new record of 2.3 million last year, more than double the volume in 2006, and industry analysts estimate that it will hit at least 3 million in 2009 in the absence of a government rescue.

One of the biggest difficulties in modifying mortgages has been the fact that most loans were bundled into pools, which were then resold as mortgage-backed securities. Mortgage servicers, third-party companies, collect the monthly payments and take action against delinquent borrowers. These companies remain nervous that bondholders will sue them if they make overly generous concessions.

Mr. Obama’s plan risks angering vast numbers of homeowners, both those at risk of losing their homes and the tens of millions more who are current on their payments and bitterly resent the government bailing out those who borrowed more than they could afford.

Even though there are political hazards of bailing out people who made bad decisions, many economists say the government needs to attack foreclosures if it wants to turn around the economy.

The Obama Administration has already taken several steps to make the transition from trial to permanent modification easier and more transparent by:

* Extending the period for trial modifications started on or before September 1st to give homeowners more time to submit required information;
* Streamlining the application process to minimize paperwork and simplify the submission process; meeting regularly with servicers to identify necessary improvement to borrower outreach and responsiveness;
* Developing operational metrics to hold servicers accountable for their performance, which will soon be reported publicly.
More information about the Obama Administration’s mortgage modification program can be found at

If you live in Southern California I also offer a Free Consultation that can help you make the best financial decisions so that you are fully informed of all the possibilities.

For stats on how the major loan servicers are converting their temporary loan modifications to permanent please refer to

December 1, 2009

Are You ‘Underwater’ on your home?

Posted in Forclosure, Loan Modification tagged , at 7:02 pm by demetriagraves

New data available on the internet indicates that a staggering 23 percent of American home mortgages are “underwater” – that is, the owners owe more money than their property is currently worth.

As with many of the repercussions of the mortgage industry’s collapse, those hardest hit by underwater loans live in the states that were hotbeds of speculative and explosive real estate development during the boom:  California, Florida, Nevada and Arizona.

As job losses mount and Americans are faced with mortgage payments they can no longer afford, many are asking: Should I stay or should I go?

Here’s some troubling numbers, which some experts say could slow the housing sector’s recovery:

  • The total number of households with underwater mortgages comes to nearly 10.7 million, close to one in four homes.
  • Insiders apparently expect home prices to bottom out in 2011, meaning that the number of underwater homes is likely to increase between now and then.
  • As many as 5.3 million homeowners currently have mortgages worth at least 20 percent greater than the value of their home.

What does all this mean?

Underwater mortgages are problematic, but how will they affect the economy and the American people? Here are the main areas to consider:

  • Decreased mobility: People with too-hefty mortgages may find themselves tied to their house because they aren’t able to sell it to pay off their loans. This could mean not being able to move a significant distance away, even for a high-paying job offer.
  • Delayed recovery: Some of the underwater houses are likely to go into foreclosure. Some owners have reportedly already received default notices from their banks. If and when banks foreclose on these properties, more houses will be on the market, adding to the current real estate glut and potentially keeping prices low.
  • Conflicted lenders: Apparently some lenders are reluctant to reduce the principal on mortgage loans for fear that the move would set up expectations for all borrowers and lead to widespread abandonment of payments.

If you are in Southern California, your home is ‘underwater’ and you want to move or are having trouble making payments, please call my office for a free consultation. You do have choices and I want to help you make the best choice possible.

November 19, 2009

Progress of Loan Modification Affordability Program

Posted in Loan Modification tagged at 1:26 am by demetriagraves

After starting slowly, the Obama administration’s mortgage relief program is now ramping up according to a recent government report. Currently 20% of eligible homeowners are getting relief but it’s still unclear how many of these may still lose their home.

In this effort known as “Making Home Affordable”, lenders are paid to lower a borrower’s mortgage payments. This program has struggled since being launched in March with lenders applying it sporadically throughout the industry.

As of the end of October, more than 650,000 borrowers, or 20% of those eligible, have signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels.

In California, about 130,000 homeowners have been enrolled in this loan modification program, which the President announced in February. This is about 19% the state’s homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.

Government officials say they are pressing mortgage companies hard to improve their performance. Still, many housing advocates have been disappointed with the $50 billion plan’s progress and say that getting a loan modification remains a battle. Many economists doubt the Obama administration will reach its broad goal of helping 3 million to 4 million borrowers within three years.

Most of the borrowers enrolled so far have been signed up for preliminary trial modifications for up to five months. To make the change permanent, they must complete a mountain of paperwork and show they can make their payments on time. The Treasury Department is meant to release data on the conversion rate into permanent modifications in the next few weeks.

Many mortgage services were low-cost operations, with staff in collections departments working to collect on payments from lax borrowers. Those and thousands of new staff, are now pursuing a different work activity – figuring out which of the thousands of borrowers may qualify for help.

Banks and other lenders, for the most part, have been slow to adapt to an unfamiliar climate of falling home prices and rising unemployment.