As the nation’s largest banks are paying multi-billion dollar settlements and being investigated by Attorneys General and other regulators, many of their servicing problems and abuses continue to hurt homeowners. A new report by the California Reinvestment Coalition (CRC) with data analysis by Urban Strategies Council, “Race to the Bottom: An Analysis of HAMP Loan Modification Outcomes by Race and Ethnicity for California”, reveals that California homeowners are having trouble accessing sustainable home loan modifications, and that borrowers of color are disproportionately facing specific problems that are making it more difficult for them to access modifications. The report analyzes recently released data from the Treasury Department about the HAMP program, in conjunction with CRC’s April/May 2011 survey of nonprofit housing counselors.

The findings of the report suggest that modifications are still hard to come by, and that servicers have not corrected many of the problems that have led to investigations of foreclosure abuses.
• Of 568,630 borrowers requesting loan modifications in California, 46% were denied immediately. A mere 23% of those who applied received a permanent modification. The other third of the applicants were either stuck in aged trial modifications or had their modifications cancelled.
• Principal reductions are nearly impossible to receive. In Los Angeles and Fresno, for example, only 5% of loan modifications included some degree of principal forgiveness.
• An astonishing 94% of housing counselors reported that homeowners are losing their homes while negotiating for a loan modification with their servicer (the “dual track” problem).
• Much of the data released from Treasury was incomplete or inadequate for true transparency.