Obama to Lenders: Ease More Mortgages or Face Penalties

President ObamaThe 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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2 thoughts on “Obama to Lenders: Ease More Mortgages or Face Penalties

  • November 30, 2009 at 4:06 pm
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    This is no surprise at all. The Fed/FTC and state AGs have regulated out of business any company who would want to assist a homeowner modify their loan.
    Outrageous licensing fees, requirements that prohibit any service charges until the loan is modified and if it is not modified you can’t collect a dime for your efforts. And they have limited that fee to $1,000.
    So what company or financial professional would want to risk working for 4-6 months processing complilcated paperwork and negotiating complicated deals with an unwilling and overburdened bank, all to HOPE AND PRAY they can charge $1,000. You can earn more money working for McDonalds.
    And now BHO is upset that homeowners are not being helped? Really, and the solution is for what once again? The Government to take over and or force the banks to do it their way.
    We are a few months away from total collapse.

  • November 30, 2009 at 5:03 pm
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    I can’t believe America has come to this. We have the President bullying the big Banks he just bailed out. The small Banks and Credit Unions will be the heroes in all this. Assuming they can survive the foreclosure and repossession wave (see: http://www.repofinder.com). Break up the big Banks and let the free market be free.

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