In the last post, this blog reported that the Obama administration has announced an extension, and at least one expansion, of some federal foreclosure prevention programs. The White House is expected to announce new legislation in the near future aimed at home loan refinancing under a separate federal program known as the Home Affordable Refinance Program.

Distressed homeowners in Ohio--even people with underwater mortgages, may have options to find meaningful debt relief under federal programs and also under federal bankruptcy law.

Consumers and home owners across the country have complained that banks have been sloppy in maintaining or tracking paperwork under the federal home loan modification program. Banks have reportedly lost documents of numerous homeowners and denied loan modifications based upon the alleged lack of documentation, or potentially based upon allegations of miscommunication between bank departments.

Homeowners have complained that the banks claim the homeowners failed to submit documentation due to the banking industry's own internal miscommunication and loss of documentation.

Over the past two years, roughly 1.7 million households have received trial loan modifications through the federal program. Less than half of the troubled homeowners made it through the trial period and received a permanent loan modification.

The Obama administration has criticized some of the country's largest banks for not doing enough to help distressed homeowners avoid foreclosure. The Treasury Department has joined in criticizing several of the nation's largest lenders of failing to follow the federal program vigorously and began withholding federal incentives for loan modifications under the program.

In June, Treasury began withholding the incentives from JPMorgan Chase, Bank of America, Wells Fargo and Ocwen Loan servicing. Three of the four lenders have gotten off the list between September and December last year. However, JPMorgan Chase has remained on the list of lenders who have been cited for rejecting distressed homeowners' application for a modification despite being eligible under the incentive program.

Source: AP via Fox News, "Obama administration to extend and expand foreclosure relief program," Jan. 27, 2012