Washington (CNN) - Mortgage company executives and government officials faced an angry congressional committee Tuesday concerning some of the problems with the administration's mortgage aid program aimed at avoiding foreclosures. Many of the complaints lodged by members of the House Financial Services Committee focused on the slow pace of converting trial mortgage modifications into permanent ones under the program.
While over 680,000 borrowers now have temporary adjustments which last for several months, only a small fraction of those people have been offered new permanent mortgages.
"We are terribly frustrated," Committee Chairman Rep. Barney Frank (D-Massachusetts) told the hearing.
"Why can't we do so something...I am frustrated," Rep. Emanuel Cleaver (D-Missouri) said.
In an attempt to dramatically raise the number of homeowners whose mortgages are permanently revised, the government last week announced new steps to pressure companies, including such steps as sending Treasury Department and Fannie Mae personnel to the largest 7 mortgage servicers to personally make sure applications are being processed efficiently; giving the companies specific targets and publishing more detailed information about the institutions' conversion rates.
"I think the banks have a long way to go to get up to their full potential," Assistant Treasury Secretary Herb Allison told the committee, adding the institutions recently made progress towards more conversions. "Lights need to be shine on each of these banks."
Those eligible for the $75 billion Making Home Affordable program are people who occupy the home as their primary residence; have a loan balance less than $729,750 and have a mortgage payment greater than 31 percent of their gross monthly income. Once the participants are deemed eligible they enter into the trial modification phase in which their payments are lowered and under which the customer has to make at least 3 payments. If everything goes well in that preliminary stage and their financial situation hasn't changed, their applications are evaluated for the permanent modification.
A preliminary report shows as of September 1, only 1,711 or 1.26 percent of all trial adjustments were made permanent after 3 months, according to the Congressional Oversight Panel, which is monitoring the government bailout programs.
Some members of Congress said more pressure needs to be applied.
"The banks thumb their noses at all of us," Rep. Maxine Waters (D-California) said.
In an effort to push the companies to put more eligible homeowners into permanent modifications, Treasury Department officials on Monday met in Washington with the 17 mortgage providers, including Bank of America, JPMorgan Chase, Morgan Stanley, CitiMortgage and Wells Fargo.
"Permanent modification numbers will be released on Thursday, so servicers are on notice that they must ramp up and provide sustained relief to struggling homeowners now," Assistant Treasury Secretary Michael Barr said in a statement.
Failure to send in needed paperwork is a major problem the banks and the government are both trying to solve. A Treasury Department official has said only a third of those homeowners who made at least three trial payments have submitted all necessary documents.
Two companies who testified Tuesday said they want the program to work, have added staff to help improve processing and are increasing outreach to customers.
"We fully share Treasury's commitment to convert successful trial modifications to permanent as quickly as possible. In support of that commitment Bank of America is focusing on assisting customers in providing all of the necessary documents for underwriting. Otherwise homeowners are at risk of missing this opportunity...an outcome none of us wants," Jack Schakett of Bank of America told the committee. For example, he said just last week it sent out by overnight mail another request to 50,000 people who face a Dec. 31 deadline and who have failed to submit key documents.
At the hearing Molly Sheehan, senior vice president for JPMorgan Chase, explained some of the efforts it has undertaken especially for the 51percent of borrowers who are paying but have not submitted all of their documents: "A coordinated program to call our customers 36 times, reach out by mail 15 times, and make at least 2 home visits if necessary to help complete documents, ordering key documents earlier in the process so they are ready when the borrower's documents come in to expedite underwriting...assigning specific pools of accounts to loan modification counselors to provide continuity in dealing with the customer."
Make sure Barney, Dodd and Obama are not involved.
As to this nonsense about the private sector is where jobs are created, not the government, answer me this. Who is the largest employer in the U.S. of A.? That's right, the federal government. It may surprise you that they have been for a very long time regardless (because irregardless is not a word) of who is in the oval office. Add to that state, county and municipal governments, as well as those working from federal grant money and I'd say the public sector creates a boatload of jobs (bonus: they are not in India and China). But just go on believing that big bad government is interfering with a benevolent free market that is not out to rip you off any way it can. Ignorance is bliss, I guess. Have a nice day!
P.S. Farm subsidies are an insidious socialist plot to take over American agriculture. End them now!
If Barney Franks wants to do "something" then maybe he should resign. Afterall he and Chris Dodds caused themelt down.
Here we go again, let's force private companies to lend money to people who can't afford to pay it back. Why are these mortgage "adjustments" only available to people who make less than $75,000 a year? Looks like obama is only looking after his folks.
There should be no permanent reductions. Anything a mortgage is reduced by, in principal or interest, should be tacked on in additional years. I haven't bought a single article of clothing in the last probably 18 months, and had to wash clothes at the laundrymat for a full year before buying a washer and dryer, and have kept an unsafe-for-winter vehicle rather than purchase a new one to make sure I could maintain a cushion.
If you failed at your contractural committments, start over – you took a risk when you signed on the dotted line. Regardless of how bad the economy is/was, there is no viable excuse. If you want to be certain not to lose the house, save your cash and pay in full.
Time for more government regulation. If they hadn't been so greedy, the government wouldn't have to step in.
Barney Frank is a big reason we are in this mess to begin with.
This is interesting. This story came out today and today I hear back from my mortgage servicer with a request for additional information. I have been working with my current servicer and my previous servicer (the previous servicer went under and sold my mortgage) since March of this year. See this adminstration IS able to get stuff done.
Companies are simply holding out for times to improve so they can make billions more off the backs of hurting Americans. They could care less about the American people. They only care about money and greed has them blinded to the fact that it is the little man that makes the $300.00 dollars a week that goes into the bank for them to use. They better open their eyes. I know lots of people now that are beginning to save cash and hide it rather than putting it in the bank. They spend cash for their needs. This deprives the banking insstitutions of the cash to use for over night loans.
COMMON SENSE TRANSLATION
Mortgage Modification = The charging of responsible intelligent people for the excesses of irresponsible spendthrift home buyers who feels as though society owes them a life of luxury.
Don't blame me, I voted for McCain
"51percent of borrowers who are paying but have not submitted all of their documents: "A coordinated program to call our customers 36 times, reach out by mail 15 times, and make at least 2 home visits if necessary"
So....the customer is called 36 times and reminded to get the paper work in.....And you libs think it's the bank's fault?
This is why you don't loan to people who can never pay you back.
Darn. If I was just more irresponsible and wreckless, I could be living in a luxurious three thousand square foot home with my mortgage being paid for by my fellow taxpayers, instead of living in a cramped little apartment and diligently saving for a down payment on a house. When will I ever learn?!
America, land of the free-loaders, home of the self-entitled.
What about those who are in negative amortization loans and upside on the home's value? Absolutely nothing is being done to help those people unless they fit the very narrow criteria listed above. The issue is the banks received all of the bailout money with no strings attached. Wtih their bets covered they are now under no obligation to help, nor do they feel any motivation to help. With their losses secured on the back end, they are now comfortable with allowing foreclosures to take place on the front end so they can have a legitimate write-down that in turn results in a write-off for tax purposes. They are making money coming and going. The party never stops. The suckers are the hard-working, tax-paying citizens of this country. How many neg am loans are out there? What is being done to address them? How many of those loans are in jeapardy of defaulting given the current facts of the housing crisis? Just because people are on time with payments does not mean they are not in jeopardy of defaulting in the not-to-distant future. In my opinion 100% of the neg am loans out there are in jeopardy of defaulting.
OOH, I know the answer: Because it is not the governments job to tell a bank who they can and can not give mortgages to. The single biggest reason for the collapse is because the far left tried to play equal opportunity through mortgages. Sure the banks, the people involved, etc.. etc... all were at fault at some point along the way, but it all started how most problems start in this country:
over-regulation and control by the government.
History shows us this time and time again but people ignore it.
Angry Congress, just wait, OsamaObama is raising our taxes again by running up the deficit again with a main street bail out. So what king of jobs, all low pay, no future jobs, Obama wants everyone to be welfare people and in debted to the savior Obama. Obama is not the savior but the antichrist. It is time for America to rebell against the Democratic and Obama administrtation berfore they ruin America anymore. Main Street doesnt want Obama Welfare, we want REAL JOBS, not Obama welfare jobs for $7.25 an hour. Obama needs to stopped before he taxes all America to its ruin. Impeach Obama and vote out the rest and Fire the others.
Yep, the people who voted for Obama believed Obama was going to take away from the rich and give to them, the poor things! Well, looky looky here!. Go broke, you good-for-nothing whining, do-nothing so-called Americans. Get off your arses and support yourselves. I didn't work all these years to feed you.