Treasury to press mortgage firms on foreclosure prevention
WASHINGTON - Faced with sluggish progress in its foreclosure-prevention effort, the Obama administration will spend the coming weeks cracking down on mortgage companies that aren’t doing enough to help borrowers at risk of losing their homes.
Treasury Department officials said yesterday they will step up pressure on the 71 companies participating in the government’s $75 billion effort to stem the foreclosure crisis. The will start this week by sending three-person “SWAT teams’’ to monitor the eight largest companies’ work and requesting twice-daily reports on their progress.
The mortgage companies have had a hard time getting borrowers to complete paperwork for the administration’s loan modification program. Nearly 60 percent of the 375,000 borrowers who qualify to have their loan modifications completed by year-end have submitted incomplete paperwork or none at all.
“Borrowers must understand the urgency of getting their completed paperwork in so they do not miss out on the opportunity for more affordable mortgage payments,’’ said Phyllis Caldwell, who leads the Treasury Department’s homeownership preservation office. The program, announced by President Obama in February, allows homeowners to have their mortgage interest rate reduced to as low as 2 percent for five years.
As of early September, only about 1,700 homeowners had finished the paperwork and received a new permanent loan. About one-third of borrowers who have submitted complete applications are still waiting for a decision.
In an effort to shame the companies into doing a better job, Treasury will publish a list next week of those that are lagging. While big lenders like
Paul Koches, executive vice president of Ocwen, said his company saved 90,000 of its roughly 370,000 distressed homeowners from foreclosure before the government program began. As of October, Ocwen had started trial modifications for 11 percent of its borrowers, up from 5 percent in July.
At American Home, spokeswoman Christine Sullivan said the company has a “large, dedicated team’’ working on the Obama plan, but also noted that the company modified more than 60,000 loans outside the Obama plan over the past year.