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Friday, July 10, 2009

White House Pleads for more Mortgage Mods

by Calculated Risk on 7/10/2009 12:21:00 AM

From the WaPo: White House Prods Banks

In a two-page letter [to the country's largest banks], Treasury Secretary Timothy F. Geithner and Shaun Donovan, secretary of the Department of Housing and Urban Development, acknowledge that the government program, known as Making Home Affordable, has yet to gain traction since being launched in March.

"We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," the letter said.
The banks were also told to designate a senior liaison for the program and to prepare for a July 28 meeting with senior Treasury and HUD officials ...

"We are asking that all servicers expand servicing capacity and improve the execution quality of loan modifications in order to help the sizable number of homeowners at risk of foreclosure and eligible for the program," the letter said.

The administration will begin issuing monthly reports by Aug. 4 detailing lenders' performance ...
The results have been disappointing so far, with few modifications and a high re-default rate. Also most of the modifications so far have been the "extend and pretend" type, with a capitalization of missed payments and fees, lower interest rates, and longer terms - leaving many borrowers with significant negative equity and high likelihood of a future default.