The government's Making Home Affordable program has done nothing to make Gordon Voelbel's New Port Richey home more affordable. The 70-year-old retiree has tried for a year to enlist the government to reduce the $809 payment on his waterfront home of 16 years. After striking one dead end after another, Voelbel is feeling more than a little frustrated. "It sure as hell hasn't worked for me. Not after 14 months,'' Voebel said. "I don't understand it. I've sent them everything they wanted. I feel like reaching through the phone line and strangling someone." His isn't the only story of elevated blood pressure and frayed nerves from an anti-foreclosure program that promised quick action but delivered mostly delays. Making Home Affordable offers loan modifications, usually at below-market interest rates, for homeowners who can prove a financial hardship. Homeowners complete three months of trial payments that don't exceed 31 percent of monthly income. Once they pass the trial and provide proper paperwork, lenders make cheaper mortgage rates permanent for the life of the loan. The government and the lender share the cost of the subsidy. Of 15,684 Tampa Bay homeowners who applied for Making Home Affordable through March 31, only 23 percent, or 3,653, had moved into permanent modifications. The peak for applications was last summer, so most of these people have waited at least eight months. It wasn't supposed to drag on so long, said Phyllis Caldwell, head of U.S. Treasury Department's Homeownership Preservation Office, which oversees the program.
Caldwell cast much of the blame on mostly private loan servicers that failed to ramp up quickly enough to handle more than a million applicants.
"Each time you start something from scratch at this scale you're going to have some challenges," Caldwell said. "We're not where we need to be."
Richard Fried finds himself in that uncomfortable spot.
He's living off unemployment insurance after his pet store manager job went away last year. That qualified as a financial hardship when the 44-year-old applied for a government-backed loan modification on his duplex in Gulfport.
Switching his rate from 7.5 percent to 2.5 percent would lower his payment from $1,150 to $706. By renting out the other half of the property he could afford the mortgage even if he took a low-wage job at McDonald's, he said.
It's not working as planned. After Fried aced his 90-day trial, Wells Fargo bank bounced him from consideration. It wanted, and didn't get, a written guarantee from the government that Fried's unemployment checks would keep coming.
"I'm shocked I'm denied. I'm just blown out of the water," Fried said.
Critics of Making Home Affordable blame the program for raising false hope among people who are ultimately rejected. Confronted with the skimpy results at moving homeowners to permanent modifications, the Treasury Department resorted to counting trial period participants as "successes."
University of Central Florida economist Sean Snaith attributes problems not just to banks' but government agencies' inexperience at managing a new $75 billion program. The result has been understaffing and bottlenecks.
"There simply wasn't the proper government infrastructure to implement these policies. Look at the stimulus package. Sixty percent still hasn't hit the economy," Snaith said. "This is also not something the private sector has had to do before. Are we modifying a hopeless case? The banks are still not sure."
Doran Cushing was on the cusp of getting a generous mortgage reduction for his 90-year-old mother, only to have SunTrust Bank present him with increasingly hollow excuses for why he no longer qualifies.
Cushing's mother's Making Home Affordable trial modification payment totaled $884, much less than her previous $1,806. She paid $207,000 in 2007 for a bungalow in St. Petersburg's Bayou Highlands neighborhood. It's now worth about $150,000.
Cushing cleared the trial period. That's when the troubles began. At the request of the bank, he submitted proof of his mother's income five separate times. Once he overcame that hurdle, the bank said Cushing's mother had failed to make the trial period payments on time. Cushing countered by providing the electronic receipts proving that she had.
The bank still wouldn't pony up with the permanent modification. It eventually concluded, nine months into the process, that Cushing's mother's $2,400 monthly income was too low for her to afford $884 each month.
Then it followed up the denial by offering a new $1,200-a-month mortgage payment, $300 higher than the payment the bank had just insisted was unaffordable.
"I think they just don't want to participate. They have done everything possible not to allow the process to go forward,'' Cushing said of SunTrust.
SunTrust spokesman Hugh Suhr couldn't speak to specific cases but talked of the bank boosting staff to handle the flood of distressed customers.
"Each situation has its own unique set of challenging circumstances to work through including, but not limited to, our having to work with multiple owners/investors of a loan who have the final say," Suhr said in an e-mail to the Times.
Multiple channels leading nowhere has been the hallmark of Voelbel's 14-month odyssey through the loan modification mire.
When the government launched Making Home Affordable in February 2009, Voelbel was among the first in line to get a new loan for his 1,500-square-foot waterfront house in west Pasco County. The single retiree felt he could no longer afford his $809 payment while living on a $796-per-month Social Security check and a $700 contribution from a housemate.
In 2009, Chase Mortgage tentatively agreed to reduce his payment to $441 a month. But much of the paperwork Voelbel sent the bank was misplaced. He re-sent it. Misplaced again. By January, Chase issued a formal response to Voelbel's Making Home Affordable request: disapproved.
Falling far short
Nationally, Making Home Affordable has fallen short of its goal to extend modifications to 4 million distressed homeowners. By the start of April, 228,000 borrowers out of nearly 1.5 million applicants have gotten permanent loan modifications. Aware of dashed expectations, Washington wants to expand housing rescue subsidies to include principal forgiveness and payment holidays for the unemployed.
Snaith assumes the program was oversold by overly optimistic politicians. The foreclosure crisis dwarfs attempts by Washington to end it. In March alone, banks sued 4,700 Tampa Bay homes for foreclosure. About 17 percent of local residential mortgages are more than 90 days delinquent.
"The program is not going to be large enough to make a fundamental difference," Snaith said.
But for many Tampa Bay residents, the unresponsiveness from institutions they were raised to trust has been an ordeal.
Said Voelbel: "This whole thing is just driving me crazy."