Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review, which has been on the web since 1995, is now published from Freeport, Maine. See main page for full contents
October 8, 2009
Many homeowners continue to complain that seeking loan modifications can be frustrating and seemingly futile: Mortgage companies routinely lose documents and require them to resubmit their files repeatedly, while giving them incorrect fax numbers and leaving them on hold for hours only to receive contradictory instructions from customer service officers.
Some mortgage companies assert they cannot modify loans because they merely send out the monthly bills, while the mortgages are owned by investors. Yet industry insiders say many mortgage companies actually profit by delaying the process and keeping homeowners in long-term delinquency, extracting myriad fees along the way. . . .
"Unacceptably large numbers of families across the country are still at risk of losing homes they could otherwise afford to stay in," Mr. Geithner said.
Treasury first announced its anti-foreclosure program in February before delivering details in March: Mortgage companies would be paid $1,000 for each loan they modified, then $1,000 a year for up to three years. The plan was advanced with the promise that it would eventually spare up to four million households from foreclosure.
But by June, evidence was mounting that the program had become a bureaucratic nightmare. Thousands of homeowners recounted poor treatment and disorganization at the hands of their mortgage companies. By the end of June, only about 50,000 loans had been modified, according to a Treasury estimate.
In July, frustrated by the pace of the progress and irritated by legions of homeowner complaints, Treasury summoned major mortgage companies to Washington for what was subsequently described by officials as a dressing-down.
In the months since, mortgage companies have added and trained staff and improved their processes of fielding applications, according to the administration.
"We've put significant pressure on the servicers to ramp up production," said the Housing and Urban Development secretary Shaun Donovan, during Thursday morning's briefing.
Still, the administration acknowledged that glitches and frustrations remain. Treasury and H.U.D. again summoned to mortgage industry officials to Washington for meetings this afternoon aimed at further accelerating the program, Mr. Donovan said.