GRAND PRONOUNCEMENTS: President Barack Obama talks about housing financing in April at the White House. From left are Treasury Secretary Timothy Geithner, the president, Housing and Urban Development Secretary Shaun Donovan, Washington homeowner Gail Johnson and White House Senior Adviser Valerie Jarrett. -- AP PHOTO/GERALD HERBERT

The Obama administration says its mortgage modification program is making progress and enrolling a growing number of people to participate in the effort to keep borrowers in their homes.

Meanwhile, many local banks and lenders are signing up just as many – and in some cases, far more – borrowers to participate in their own in-house loan modification programs.

To illustrate the difference between results from the separate efforts, the Obama administration’s Making Home Affordable loan modification effort has resulted in more than 650,000 modifications now under way across the country.

The government breaks down that total to the state level, and a little more than 7,700 modifications out of the total pool are in Tennessee.

Barb Godin, consumer credit executive at Regions Financial Corp. – one of the major lenders in the Memphis area – said the Birmingham, Ala.-based bank has 1,588 active mortgage modifications across the U.S. through Making Home Affordable. Figures for Tennessee weren’t available, because Regions is still in the process of pinpointing state totals.

Regions’ internal home loan modification efforts, on the other hand, have resulted in 3,200 modifications with a balance of around $115 million – just in Tennessee.

“So you can see in Tennessee, for our company, our internal program all by itself far outstrips what we’re doing for the entire footprint under the government program,” Godin said. “And that goes back to, we think we have additional levers that we can use in our own program that are perhaps not available in the government program.”

Outpacing the government

Making Home Affordable is a $75 billion home loan modification effort intended to reach up to 4 million homeowners, according to government figures. It works by providing incentives to loan services and borrowers and encourages lenders to lower mortgage payments.

Depending on how dire a borrower’s condition is, the person can be eligible for either the mortgage fix or a refinance.

Banks and lenders that are tackling the same problem as the government using their own programs so far appear to be casting a wider net. Since the government program is still relatively new, that may explain why more borrowers are getting help elsewhere – for now.

The need for help in general is rising fast among borrowers, according to the latest data from the Mortgage Bankers Association.

At the end of the third quarter, almost one in 10 homeowners – or 9.64 percent – was behind on loans that were for one-to-four-unit residential properties. That rate is the highest the MBA has recorded since it began tracking the data in 1972.

The delinquency rate includes loans with at least one payment past due and excludes loans that are in some stage of foreclosure.

“Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP,” said Jay Brinkmann, the MBA’s chief economist, in a statement from the group.

Personalized approach

For many reasons – including the front-end efforts that go into making sure borrowers get into the right mortgage – few customers of BancorpSouth are taking advantage of Making Home Affordable, according to BXS Mortgage Department President Bill Edwards.

That’s similar to what Godin said Regions is experiencing with the borrowers it helps. Compared to an in-house program a private lender can structure however it sees fit, Making Home Affordable can seem like more of a one-size-fits-all approach to some borrowers and lenders.

Among other things, “the government program really just looks at the debt-to-income ratio,” Godin said. “And if you’re above 31 percent, what they try to do is get your ratio below 31 percent. What they’re not looking at is the back-end ratio – all the other bills you have to pay.

“Our approach is we sit down with a customer and say, ‘Let’s talk about your cash flow, all the bills you owe, and find a solution that works all in, not just a solution on one bill.’ The government program uses more of a cookie-cutter approach.

“Another comment I would make about the government program and ours is we’ve been doing this a lot longer than the government has had this program out.”

Participation in Making Home Affordable is one of several loss mitigation options First Tennessee Bank – a subsidiary of Memphis-based First Horizon National Corp. – offers to borrowers. Sixty-eight percent of the first-lien mortgages serviced by First Tennessee are held by investors participating in Making Home Affordable, according to FHN senior vice president Cindy Maples.

“The specific loss mitigation and loan modification programs available to borrowers depend on the owner or investor of the loan in addition to the type and characteristics of mortgage loan,” Maples said. “The remaining 32 percent of first-lien residential mortgages serviced by the bank utilize specific investor programs modeled after the Making Home Affordable programs. First Tennessee also offers loan modifications on its second-lien installment and home equity lines of credit for borrowers meeting eligibility requirements.”