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US to pressure mortgage firms to help owners keep homes
By Martin Crustsinger |
November 30, 2009, Monday
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Print Edition
Print Edition
THE Obama administration, battling a foreclosure crisis that shows no signs of relenting, will step up pressure on US mortgage firms to do more to help people remain in their homes, officials said over the weekend.
The administration will announce its expanded program today, Treasury spokeswoman Meg Reilly said.
"We are taking additional steps to enhance transparency and accountability," Reilly said. She said the goal was to increase the rate that troubled home loans were converted into new loans with lower monthly payments.
Industry officials said the new effort would include more pressure on mortgage firms to accelerate loan modifications by highlighting firms that are lagging in that area.
The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.
Under the US$75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect US$1,000 initially from the government for each loan, followed by US$1,000 annually for up to three years.
The government support, which comes from the US$700 billion financial bailout program, aims at offering cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.
The Home Affordable Modification Program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.
Rising foreclosures depress home prices and threaten economic recovery.
A recent report from the Mortgage Bankers Association found that 14 percent of homeowners with loans were either behind on payments or in foreclosure at the end of September, a record level for the ninth straight quarter.
The Congressional Oversight Panel, a committee that monitors spending under Treasury's bailout program, said in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.
The program "is targeted at the housing crisis as it existed six months ago, rather than as it exists right now," the report pointed out.
The administration will announce its expanded program today, Treasury spokeswoman Meg Reilly said.
"We are taking additional steps to enhance transparency and accountability," Reilly said. She said the goal was to increase the rate that troubled home loans were converted into new loans with lower monthly payments.
Industry officials said the new effort would include more pressure on mortgage firms to accelerate loan modifications by highlighting firms that are lagging in that area.
The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.
Under the US$75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect US$1,000 initially from the government for each loan, followed by US$1,000 annually for up to three years.
The government support, which comes from the US$700 billion financial bailout program, aims at offering cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.
The Home Affordable Modification Program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.
Rising foreclosures depress home prices and threaten economic recovery.
A recent report from the Mortgage Bankers Association found that 14 percent of homeowners with loans were either behind on payments or in foreclosure at the end of September, a record level for the ninth straight quarter.
The Congressional Oversight Panel, a committee that monitors spending under Treasury's bailout program, said in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.
The program "is targeted at the housing crisis as it existed six months ago, rather than as it exists right now," the report pointed out.
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