The U.S. Treasury Department is expected to meet with lenders today to press them to do more to rework troubled home mortgage loans. The move is the latest step in the Obama administration’s efforts to battle a foreclosure crisis that shows no signs of relenting and threatens the economic recovery.
The administration is under pressure from allies to do more to help people remain in their homes as many Americans continue to lose jobs. The new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.
The Treasury already has a $75 billion program under which companies that agree to lower payments for troubled borrowers may collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years. But the Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.
A report last week from the Mortgage Bankers Association found that 14 percent of homeowners with mortgages were either behind on payments or in foreclosure at the end of September, a record level for the ninth straight quarter. A Congressional committee that monitors spending under Treasury’s $700 billion bailout program concluded in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.
The administration had initially wanted to let courts modify mortgages, but Congress refused to go along. Instead, lawmakers said lenders can be encouraged to lower rates on their own without involving the courts.
The foreclosure problem is more acute in many New York neighborhoods. The Daily News reported over the weekend that while increasing numbers homeowners in the Jamaica section of Queens are getting booted out of their homes because they can’t pay the mortgage after they lost their jobs, scam artists continue to sell bogus mortgages to unsuspecting would-be homebuyers.