If you’re waiting for a mortgage modification to make your home affordable in order to stave off default and possible foreclosure because of economic hardship, don’t hold your breathe, especially in Puerto Rico.

RG Mortgage Corporation is the only mortgage servicer on the island that is signed up to participate in the U.S. Treasury’s Making Home Affordable Program, which was launched by the Obama Administration in March 2009 to give relief to struggling homeowners.

The program’s 38 participating institutions nationwide recently got their first report card from Treasury and their performance was judged to be slow at best. Only 9 percent of eligible borrowers have received trial modifications under the plan, according to data released by Treasury.

“I think it’s safe to say we’re disappointed in the performance of some of the servicers,” Treasury’s Assistant Secretary for Financial Institutions Michael Barr told reporters in a conference call. “We expect them to do more.”

A major component of the plan devotes $75 billion of financial-rescue funds to pay incentives to mortgage servicers, borrowers and investors that agree to modify loans according to certain standards.
The Treasury defines eligible borrowers as those who are 60 or more days behind on their mortgage payments. Out of a current pool of 2.7 million such borrowers, only 15 percent have been offered a trial modification. Under the program, borrowers must complete a three-month trial period with the modified loan before any incentives are paid out.

In the case of RG Mortgage, the incentive is valued at $57 million. RG estimates that it has 3,309 eligible borrowers who are 60 plus days delinquent and it has extended 72 offers of modification, according to Treasury’s report card as of the end of July 2009. Thus far, it has started no trial modifications.

To pressure servicers to improve their performance, the administration recently announced that Freddie Mac (FRE) will audit the applications of borrowers turned down from the program to see whether they slipped through the cracks. Meanwhile, the Treasury will continue to report the performance of servicers on a monthly basis.

Boomerang this: With mortgage delinquencies and foreclosures running high, all local banks have initiated loss mitigation programs geared to assist borrowers. We’d like to report on your experiences in this area, pro and con. Email us at www.metrosanjuan.com.

— Robert P. Schoene