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Washington to press banks on mortgage relief

THE Obama administration plans to announce tomorrow a campaign to press mortgage companies to reduce payments for many more struggling homeowners, The New York Times reported in Sunday editions.

"The banks are not doing a good enough job," the Times quoted the Treasury Department's assistant secretary for financial institutions as saying in a Friday interview.

"Some of the firms ought to be embarrassed, and they will be," Michael Barr told the newspaper.

While lenders in recent months have stepped up the pace of mortgage payment cuts for financially troubled borrowers, the Times reported there was increasing evidence that the US$75 billion taxpayer-funded effort to fight foreclosures was heading for trouble.

Most of the loans modified under the program remain in a trial stage, and only a small percentage have become permanent.

According to the report, Capitol Hill aides in close contact with senior Treasury officials say a consensus has emerged at the department that the program has proved inadequate.

Barr told the newspaper that Washington would try to shame the lenders by publicly naming institutions that fail to move quickly enough to lower mortgage payments permanently. The Treasury Department also will not pay the lenders promised cash incentives until the payment cuts become permanent, he added.

"They're not getting a penny from the federal government until they move forward," he told the newspaper.

White House spokeswoman Jennifer Psaki told the Times the administration would continue to refine the mortgage program as needed. "We will not be satisfied until more program participants are transitioning from trial to permanent modifications," she was quoted as saying.

White House officials could not immediately be reached for comment.


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