Treasury Secretary Geitner Speaks Out On Loan Mods. 7/11/09

Mortgage firms asked to step up loan modification effort In a letter to 25 mortgage-servicing firms, Timothy Geithner, the Treasury Secretary, and Urban Development Secretary Shaun Donovan, have urged the firms to modify more home loans. Analysts say the Obama administration's loan modification program has not done enough to stem the rising tide of foreclosures so far. The program's effectiveness has been hampered by mortgage firms not being able to keep pace with the applications received for loan modification. "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," wrote Geithner and Donovan in their letter. The administration exhorted the firms to provide "an escalation path for borrowers dissatisfied with the service they have received" and suggest ways of improving the design of the program. Industry experts have been disappointed with the pace of the program so far. "We are not getting anywhere near the level of resolutions we expected," says Bruce Dorpalen, national director at Acorn Housing Corp. Housing counselors say there is a need to raise homeowners' awareness of the program. "Homeowners on their own are not able to navigate the system," says Maeve Elise Brown, executive director of Housing and Economic Rights Advocates. Homeowners say downpayment and closing costs are far too high According to the "2009 National Housing Pulse Survey," conducted by the National Association of Realtors (NAR), homeowners consider high downpayments and closing costs as the greatest obstacles to home purchase. The survey participants said that they were highly concerned about their job security and their ability to get home loan. "Homeownership is an investment in your future; however, saving for a downpayment and closing costs is still too great of an obstacle for 82% of house hunters looking to take advantage of the current market," said NAR President Charles McMillan. Despite the concerns about the economy, 83% of the survey participants said they consider buying a home to be a good financial investment. Foreclosure remains an important concern for many homeowners with 51% of the survey participants saying foreclosures are a big problem in their area. About 70% said they are not confident of getting approval for a home loan and there are fewer mortgage options offered by banks. NAR has expressed concern about the continuing credit crunch. "While there has been some easing of credit in the mortgage market, the availability of credit continues to be an issue for many qualified home buyers," said McMillan.

In the News "Record 1 in 10 homeowners in mortgage trouble" – MSNBC (12/05/08) "U.S. homeowners are falling behind on their mortgages at increasing rates ..." – San Francisco Chronicle (04/03/09) "While the federal government and banks say they're trying to help homeowners avoid foreclosure through various help lines and more, an ABC News investigation has found that the process ... can be disorganized and frustrating, hardly consumer friendly" – ABC News (01/22/09)