One of the recurring themes when it comes to the government-sponsored home loan modifications programs has been homeowners who don’t follow through. After the initial trial period, homeowners have to provide lenders with certain types of documentation and paperwork in order to move on to the next step and, eventually, wind up with a home loan that’s been permanently modified.

As of now, loan servicers are no longer able to cancel a Make Home Affordable trial modification that is scheduled to expire prior to January 31 for any reason, other than that the property doesn’t qualify. This means that borrowers who missed trial modification payments or who did not turn in the required documentation can’t be dropped from the program. The servicers are required to notify the borrower in writing of what’s missing, and the borrowers have another 30 days to comply.

This directive comes as recent reports show that the vast majority of people that enter the trial modification program – over 80 percent by some estimates – aren’t following through with the entire process, and are winding up in redefault.

Part of the administration’s Mortgage Modification Conversion Drive, this instruction was designed to help borrowers whose trial period expired at the end of the year. The administration has blamed both borrowers and home loan servicers for the problems, as servicers have severely struggled to get the necessary documentation to make the changes to the home loans permanent.

This followed a move by the administration in October to try to loosen the requirements for documentation. In October, they allowed an extra two months for an initial set of trial modifications to be completed, beyond the original three months.

The raw statistics for the home loans modification program aren’t encouraging. Servicers have made permanent only 31,382 modifications by the end of November. It’s estimated that 4 million mortgages in the United States are eligible for the program. There are an estimated total of 728,000 home loans stuck somewhere or another in the modification process, with many set to expire on December 31. The administration hopes to see as many as 350,000 of those become permanent.

The good news is that home loan servicers seem to have made some progress. Servicers have added extra staff to not only process the home loan modifications, but to handle the process of getting the required documentation from home loan borrowers in order to keep the process moving along.

Photo via monkeywing