Banks Asked to Ramp Up Loan Help

U.S. Wants 500,000 Mortgage Modifications by Nov. 1; Firms Ask for Clarity
July 29, 2009 - by Renae Merle - Washington Post Staff Writer

Senior administration officials pressed executives from the nation's largest banks Tuesday to speed help to distressed borrowers after a frustrating start to the government's foreclosure-prevention effort and set a goal of more than doubling the number of homeowners receiving aid by November.

After a series of meetings with top banking executives, Treasury Department officials said they want lenders to modify 500,0000 mortgages by Nov. 1. Since the program, known as Making Home Affordable, began in March, it has recorded about 200,000 loan modifications. Read more ...

Related articles
Treasury Says Servicers Commit To Increased Loan Mod, July 28, 2009, Forbes
Mortgage Servicers Pledge to Accelerate Modifications, July 28, 2009, Bloomberg
Servicers Attend Meeting of the Minds in Washington, July 28, 2009, Housingwire
Administration pushes servicers to modify more mortgages, July 29, 2008, Seattle Post Intelligencer

Unintended consequence of mortgage modifications: falling credit scores

July 26, 2009 - by Alexis Leondis - Bloomberg News

NEW YORK — Victor Stern thought his money troubles were over when he got approval to modify his home loan.

Then his credit score dropped 121 points.

Stern, a business development director at an information technology company in Charlotte, N.C., said he was shocked to see his credit score drop to 619 from 740 after entering the trial period for a loan adjustment under President Barack Obama's Home Affordable Modification Program. A salary reduction caused him to seek a change in the terms of his loan before he missed any payments.

Mortgage lenders, including banks such as Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., report loan modifications to credit bureaus. The adjustments can lower credit scores because of the way the FICO formula, the most widely used by U.S. lenders, works. Read more ...