Bankers, Lawmakers Assail Pace of Obama’s Mortgage Programs

July 16, 2009 - By Dawn Kopecki and Jody Shenn - Bloomberg

The Obama administration may be “just going through the motions” in dealing with the deficiencies of U.S. anti-foreclosure programs, leaving a record number of struggling homeowners with few options for relief, Senate Banking Committee Chairman Christopher Dodd said.

“I’ve had a lot of frustrations in trying to come up with plans that work,” Dodd, a Connecticut Democrat, said during a break in a hearing on the programs today in Washington. “I’m concerned that we’re just going through the motions. I don’t get the sense of urgency.”
A Bank of America Corp. executive told Dodd’s committee that the administration stokes “confusion and delay” among lenders when it announces anti-foreclosure plans before completing the program details, while Senator Richard Shelby of Alabama complained that the programs have fallen short of goals.

“Existing modification programs have not been very effective,” Shelby, the ranking Republican on the Senate Banking Committee, said. “Sustainable policies must be based on economic realities and facts, not wishful thinking.” more ...

Mortgage-Bond Holders Seek Borrower Debt Reductions

July 16, 2009 - By Jody Shenn - Bloomberg

Mortgage-bond investors want more homeowners to be given aid that reduces the size of their debt below the value of their property, a Fortress Investment Group executive told Congress.

Banks controlling loan-modification decisions as servicers have blocked such relief because other types of changes to mortgage terms don’t require the banks to suffer losses on their holdings of home-equity loans, Curtis Glovier, a managing director at the New York-based asset manager said in prepared testimony to the Senate Banking Committee in Washington today.

“Investors are willing to do our part by making a significant sacrifice in reducing mortgage principal,” he said, speaking on behalf of the Mortgage Investors Coalition, a group formed in April that represents 11 firms with $200 billion of assets under management. more ...

Administration Weighs More Foreclosure Aid

Homes Could Be Rented Under Proposal

July 17, 2009 - By Renae Merle - Washington Post Staff Writer

A top Treasury Department official told a Senate panel yesterday that the government is considering a proposal to allow homeowners to stay in their home as renters after a foreclosure. If enacted, the plan would attempt to address the glut of vacant properties in neighborhoods across the country, helping drag down home values. It would be yet another acknowledgment by the Obama administration that some borrowers cannot be saved from foreclosure despite government and industry efforts. more ...

From Treasury to Banks, an Ultimatum on Mortgage Relief

A recent article by Joe Nocera of the New York Times attempts why so many loan servicers are having difficulty getting up to speed with the Obama administration's Making Home Affordable program:

“Servicers are just not equipped to do this,” said William Kelvie, the chief executive of Overture Technologies, a company that sells underwriting software. If you want to understand why loan modifications have been so slow in coming, that’s a pretty good place to start.

For most of its history, the mortgage servicing industry — which is dominated by big banks like Bank of America, Wells Fargo, and JPMorgan Chase — did relatively simple tasks: it collected mortgage payments, paid taxes on the properties and so on. Yes, it dealt with borrowers who were in arrears — which usually amounted to no more than 2 or 3 percent of their portfolio at any one time — but mainly it either prodded people to get current on their payments or initiated foreclosure proceedings.

Modifying loans — thousands upon thousands of loans, amounting to as much as 25 percent of a servicer’s portfolio — is a much more complex task. For some servicers, the sheer numbers can “overwhelm the system,” said Larry B. Litton Jr., the chief executive of Litton Loan Servicing, which is owned by Goldman Sachs and which has long specialized in loan modifications. That is at least part of the reason why borrowers are having so much trouble getting their servicers to take their calls: many servicers can’t cope with the volume.

More important, loan modification requires a lot of work. They can’t be done in a blanket, one-size-fits-all fashion. Rather, loan modification is a one-on-one process that requires servicers to do something that should have been done in the first place: actually underwrite the loan.

The full article is available here

White House Prods Banks

Letter Tells Chiefs To Start Backing Mortgage Relief

July 10, 2009, by Renae Merle, Washington Post Staff Writer

The Obama administration yesterday scolded the heads of the country's largest banks, urging them to move faster and do more to help millions of distressed homeowners under a federal foreclosure prevention program.

In a two-page letter, 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. more ...

CNNMoney.com interviews executive director of Hope Now

CNNMoney.com interviews Faith Schwartz, Executive Director of Hope Now, a coalition of servicers, community groups and mortgage investors working to stem foreclosures.

Freddie Mac turns to YouTube

New Video Shows Which Documents Can Help Reduce Repeat Calls To Servicers

McLean, VA – Freddie Mac today posted a new video on YouTube.com that shows late-paying borrowers how gathering a few financial documents before calling a mortgage servicer can cut the time needed to determine their eligibility and process their application for a loan modification under President Obama's Making Home Affordable program or Freddie Mac's other workout initiatives.

Available in English and Spanish versions, the new Freddie Mac video, “Stop Foreclosure: Documents Your Lender Needs to Help You,” can be seen at Freddie Mac’s channel on YouTube at http://www.youtube.com/FreddieMacWeb.



The two-minute video shows step-by-step which documents borrowers should have on hand when they call their servicer to discuss loan modifications. These documents can cut the time a servicer will need to understand the borrower's situation, determine his or her eligibility for a workout, and process the application.

"America's servicers are handling an extraordinary volume of calls from distressed borrowers seeking an Home Affordable Modification under the President's program," said Ingrid Beckles, senior vice president of default asset management at Freddie Mac. "By taking a few moments to gather these documents borrowers can help their servicer understand their financial situation and reduce the need for repeat calls."