President Wants To Help Home Owners Hold On To Their Homes
11/30/2009
Source: Stephanie Dhue, Nightly Business Report Correspondent

SUSIE GHARIB: Tough action today from the White House to stop the pace of foreclosures. The Obama administration announced new measures that pressure mortgage lenders to help borrowers at risk of losing their homes. The administration hopes to shame the mortgage industry into doing a better job, speeding up the progress of loan modifications so people can stay in their homes. Stephanie Dhue has more.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Out of 650,000 trial modifications, only a tiny fraction have been made permanent. Treasury's Michael Barr says the banking industry has to do better.

MICHAEL BARR, TREASURY ASSISTANT, SECRETARY FOR FINANCIAL INSTITUTIONS (BY TELEPHONE): We're really focused on making sure that the servicers do what it takes, that the banks step up to their responsibility to get the job done.

DHUE: With more than half of those modified loans being paid on time, Treasury wants them to be made permanent by the end of the year. To make that happen, Treasury will be sending in bureaucratic SWAT teams to top loan servicers this week to oversee the process. It's also requiring firms decide on each loan and notify the borrower. Servicers who don't comply could be fined. Treasury says borrowers also have to step up and fully document their loans. Mortgage industry representative Faith Schwartz says getting that paperwork is an obstacle.

FAITH SCHWARTZ, EXEC. DIRECTOR, HOPE NOW ALLIANCE: Paperwork is a big part of it. It's just a technically cumbersome program because it's government/taxpayer dollars. There's a reason.

DHUE: Consumer advocate Ira Rheingold says that's an excuse for a program that is fundamentally flawed.

IRA RHEINGOLD, EXEC. DIR., NATIONAL ASSN. OF CONSUMER ADVOCATES: Treasury doesn't get it. Treasury continues to rely on the good word of the mortgage servicing industry, the same people who put us in this mess today and the same people who created the foreclosure problem that we are living with today. I think fundamentally that's wrong.

DHUE: The Treasury is also trying to shame banks into action by embarrassing them publicly. Next week, it'll release a list of loan servicers along with just how many mortgages each has modified. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.