The federal government said Thursday it had met its goal of beginning trial loan modifications for 500,000 financially troubled homeowners in a sign the foreclosure-prevention plan is gaining traction.
The loan numbers were released as several senior House lawmakers expressed support for extending an $8,000 tax credit for first-time home buyers. Talk of extending the credit shows how lawmakers believe the fragile housing market remains dependent on federal support.
Treasury Secretary Timothy Geithner said the number of people participating in the modification effort is, for the first time, increasing at a rate faster than that of new families facing the risk of foreclosure. But the number of families at risk is still "unacceptably large," he said.
Under the modification program, eligible borrowers who are behind on their mortgage payments or at risk of imminent default can get their payments reduced. It is too soon to tell whether the program will be a success; most of the modifications are still in a trial period.
Borrowers typically must be current on their payments in the trial program after three months -- and submit such documentation as tax returns and pay stubs -- to qualify for a reworked mortgage.
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