The U.S. Treasury announced that 500,000 trial loan modifications have been completed under the Making Home Affordable program. Secretary Timothy Geithner said the number of trial workouts is rising faster than the number of homeowners nearing foreclosure.

However, before loans can be considered “reworked,” home owners must submit tax returns and other documentation and make timely payments for three months. It also is unclear how the Obama administration will handle unemployed or underemployed borrowers who do not qualify for a workout. A proposal is being considered to lower monthly payments to less than 31 percent of income while borrowers seek new jobs.

Source: Wall Street Journal, Corey Boles and Ruth Simon (10/09/09