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Weekly UpdatesThe Treasury Secretary and the Secretary of Housing and Urban Development (HUD) sent a joint letter to the 25 largest mortgage servicers on July 9, urging them to appoint a special liaison officer to work with the government to find ways to step up loan modifications. A July 10 article by Reuters referenced the letter, saying it urged servicers to "quicken the pace of modifying home loans."
Treasury and HUD officials planned to host a meeting with large servicers on July 28, according to the letter, to get a status report on what servicers are doing to ramp up foreclosure-avoidance efforts and to make sure that servicers are not improperly disqualifying borrowers seeking assistance under the Obama plans.
"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 stated.
The Obama administration programs to assist borrowers facing default were initially designed with the goal of saving as many as 4 million borrowers from foreclosure. News reports have noted that progress has been slow in meeting that goal, which in turn has caused Treasury to step up pressure on servicers.
According to data released June 30 from the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS), servicers made 185, 156 loan modifications during the first quarter of the year. That was up 55 percent from the fourth quarter of 2008 and up 172 percent from the first quarter of 2008, according to the bank regulators' Mortgage Metrics Report. The OCC and OTS report is based on data from loan servicing companies that service 64 percent of all first-lien mortgages in the United States.
The regulators' report noted, "More than half of the modifications in the first quarter of 2009 resulted in lower monthly principal and interest payments, as servicers focused on achieving more sustainable mortgage payments." A press release said that modifications during the first quarter that reduced monthly payments by 20 percent or more jumped to 29 percent of all modifications. Meanwhile, loan-workout efforts that resulted in higher payments for troubled borrowers made up only 19 percent of modifications--down 25 percent from the prior quarter.
OCC and OTS reported that foreclosures in process during the first quarter of 2009 increased to 844, 389 or roughly 2.5 percent of the loans serviced by the reporting servicers, as moratoriums on foreclosures expired. That increase represented a 22 percent jump from the fourth quarter of 2008 and a 73 percent rise from the first quarter of 2008.
Meanwhile, Reuters reported that the letter "asks servicers to expand their reporting of modification work, create stronger measurements for how they deliver help and cooperate with a fail-safe program that will make sure that eligible borrowers are not wrongly denied aid."
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