The Obama Administration today warned mortgage lenders that not enough loans have been modified and not enough re-drawn mortgages have been made permanent under an existing effort to help homeowners avoid foreclosure.
Mortgage lenders could face financial penalties and other actions, which would include the public outing of companies that have not met their obligations.
U.S. Treasury and Department of Housing and Urban Development officials kicked off what it dubbed, the “Mortgage Modification Conversion Drive,” a second phase of a program designed to help 650,000 homeowners by lowering mortgages payments.
Thus far, about 375,000 of these borrowers have begun trial modifications and are scheduled to convert to permanent modifications by the end of the year.
Out of growing frustration with the pace and follow-through efforts by a majority of mortgage lenders, the administration said it will intervene to make sure more borrowers are sufficiently assisted and that the modifications become permanent.
Officials said they will meet regularly with mortgage servicers to “identify necessary improvement to borrower outreach and responsiveness.”
Treasury and HUD officials outlined the following measures to assist borrowers:
- Extend the period for trial modifications started on or before September 1st to give homeowners more time to submit required information;
- Streamline the application process to minimize paperwork and simplify the submission process;
- Develop operational metrics to hold servicers accountable for their performance, which will soon be reported publicly;
- Enhance borrower resources on the MakingHomeAffordable.gov website and the Homeowner’s Hotline (888-995-HOPE) to provide direct access to tools and housing counselors.
The administration’s crackdown on mortgage lenders will include requirements to “submit a schedule demonstrating plans to reach a decision on each loan for which they have documentation.”
Lenders also will be required to report the status of each modification to “provide additional transparency about situations where borrowers face obstacles to moving to the permanent phase.”
Federal officials also said they will reach out to more state and local organizations to increase awareness of the modification program and expand the resources available to borrowers.
More information about the Obama Administration’s mortgage modification program can be found at www.MakingHomeAffordable.gov.
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