Senate Democrats Question Geithner On MHA Progress

Democrats are pressing Treasury Secretary Tim Geithner to use his department's leverage to ensure that servicers effectively respond to homeowners who qualify for and seek assistance under the Making Home Affordable (MHA) program announced in March. In a letter addressed to Geithner and dated June 24, Senate Banking Committee Chair Chris Dodd and 19 other senators wrote that they are ‘concerned about the difficulty that too many homeowners are still facing in accessing the government's foreclosure prevention programs through their servicers." A recent report from the National Foreclosure Mitigation Counseling Program indicates that homeowners are waiting, on average, 45-60 days for responses to requests for help. Other homeowners have found servicers reluctant to make meaningful changes to the terms of their mortgages, despite advertised participation in the Obama administration's foreclosure prevention initiatives, according to a Dodd press statement. "Banks and loan servicers who have agreed to participate in the administration's foreclosure prevention programs must hold up their end of the bargain, and Treasury Secretary Geithner must remain vigilant to ensure that they do so," Dodd said in the statement. In their letter, the senators ask Geithner about what strategies the Treasury is implementing to encourage servicers' capacity expansion, wondering if any consideration has been given to requiring participating servicers to submit detailed plans for hiring and staff training, as well as for updating information systems. The senators additionally grill Geithner on the criteria used in evaluating servicer performance and the steps being taken to encourage greater servicer participation. Approximately three-quarters of the country's loans are serviced by the more than two dozen servicers participating in MHA. Notable holdouts, which the nonprofit group ACORN has dubbed the "Home Wrecker 4," include Barclay's HomeEq unit, Goldman Sachs' Litton Loan Servicing, OneWest Bank (the former IndyMac) and Wilbur Ross' American Home Mortgage Servicing. "Homeowners who are looking to get help before it's too late should not have to wait two months to receive an answer to their questions," said Sen. Jack Reed, D-R.I., in a statement. "The administration must keep pushing to ensure that servicers' public pronouncements translate into relief for homeowners." The senators also noted that they are concerned about the large number of option adjustable-rate mortgages (ARMs) scheduled to reset in the next four years – a number that some estimates place around the 1 million mark. "In addition to the outreach that servicers may be doing to contact homeowners with option ARMs, what assurances have the Department of Treasury and its agents received that servicers are developing the capacity to respond to the potential onslaught of requests for modifications?" the senators ask Geithner in their letter. SOURCE: Senate Banking Co


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