White House, mortgage firms meet on loans
Lenders pledge to help borrowers get modifications
WASHINGTON - The Obama administration, scrambling to get its main housing initiative on track, extracted a pledge from 25 mortgage company executives to improve their efforts to assist borrowers in danger of foreclosure.
In an all-day series of meetings yesterday at the Treasury Department, government officials reached a verbal agreement with the executives for a new goal of about 500,000 loan modifications by Nov. 1 and stressed the program’s urgency.
The sessions came amid concerns that the Obama administration will fall far short of its original goal of helping up to 3 million to 4 million troubled borrowers with modified loans.
As of this week, only about 200,000 borrowers were enrolled in three-month trial loan modifications, out of about 370,000 who were offered modifications by mortgage companies.
“Today’s meeting was an opportunity to identify ways to accelerate the program and bring relief faster,’’ Treasury Secretary Tim Geithner said.
But mortgage companies also say the Obama administration - which announced the program in February - left the public with the impression that the program would be instantly available.
“It was very difficult as an industry as a whole to try to live up to those expectations,’’ said Dan Frahm, a Bank of America spokesman, who described yesterday’s meeting as a “realistic’’ exchange about how the industry can improve its efforts and possibly expand the loan modification effort to more borrowers.
For months, borrowers, housing counselors, and activist groups alike complain that the process is a confusing, bureaucratic nightmare.
“There needs to be a lot more accountability and oversight,’’ said Brenda Muniz, legislative director for the community group ACORN.
Lenders, she said, are “doing things that are just outright prohibited’’ under the plan.
Housing counselors say borrowers are being charged upfront fees and given inaccurate or confusing information about the program. The delays are long and, in some cases, lenders continue the foreclosure process while loans are being reviewed.
Yesterday, an activist group in Minnesota filed a lawsuit seeking to stop home foreclosures in that state. Mark Ireland, an attorney with the Minnesota-based Foreclosure Law Relief Project, said the government has failed to establish the procedures needed to ensure the fair and uniform administration of the program. Loan servicers are not required to tell a homeowner why they were denied a loan modification.
“Decisions are made under a cloak of secrecy and there is no formal way to challenge these decisions,’’ Ireland said.
