Treasury to Shame Financial Firms for Not Modifying Home Loans

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments. Read more at the NYT

Treasury has been shaming since August. The laggards in modifications and the standouts:

And among the laggards are two of the top three: Wells Fargo and Bank of America (the largest).

There are some standouts among the large servicers: JPMorgan Chase, GMAC, Aurora and Saxon. The gap between those top performers and the others is quite wide. JPMorgan Chase, for instance, has started nearly three times as many trial modifications under the program as Bank of America. But it services only about half as many eligible loans that are 60 days or more delinquent, a rough indicator that Treasury used to estimate the total eligible loan pool. ProPublica

Squiddy Republicans Question Obama's Home Foreclosure Plan

Even if these questions were valid -- mostly they just seem like digs that Obama can't really do anything about and some questions he answered if only they listened -- the Palin-ized republicans aren't being helpful and they aren't scoring any points except with their own small audience because they're being a bunch of squids.

CNN: House Republican Whip Eric Cantor, R-Virginia, along with Minority Leader John Boehner, R-Ohio, sent a letter Wednesday to the president "seeking clarification on six important questions about [Obama's] broad housing proposal," according to a press release from Cantor's office.

Read Obama's plan and see the video here.
Here are some of their questions: 

• What will your plan do for the over 90 percent of homeowners who are playing and paying by the rules?

• Does your plan compensate banks for bad mortgages they should have never made in the first place?

• Will individuals who misrepresented their income or assets on their original mortgage application be eligible to get the taxpayer funded assistance under your plan?

• Will you require mortgage servicers to verify income and other eligibility standards before modifying mortgages?

• What will you do to prevent the same mortgages that receive assistance and are modified from going into default three, six or eight months later?

• How do you intend to move forward in the drafting of the legislation and who will author it?

Next: Reducing Mortgages To Stem Foreclosures

On Wednesday in Phoenix, Obama will announce a plan to stop home foreclosures.

Bloomberg: The White House is willing to spend more than the $50 billion already pledged to stem home foreclosures and intends to focus its efforts on reducing monthly mortgage payments, rather than principal, said Lawrence Summers, the president’s top economic adviser.

“We’re prepared to do what is necessary,” Summers said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” yesterday. “Going directly at the problem means addressing affordability by addressing payments.”

Mounting foreclosures have hammered an already weakened housing market, helping to drive the economy deeper into recession. Economists surveyed by Bloomberg News forecast that gross domestic product will contract 2 percent this year, its biggest decline since 1946.

President Barack Obama will outline his proposal to deal with the housing crisis next week. The announcement will come after lawmakers voted on Obama’s $787 billion fiscal stimulus that’s aimed at restarting growth and providing for 3.5 million jobs. Read the rest

Democrats are already working on legislation:

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said the administration's program would probably require changes to federal law. Some of those are already working their way through Congress. But Frank said he is looking to pull them together into a single housing package.

The legislation would include a provision changing the bankruptcy law to allow judges to modify the mortgages of distressed homeowners, including by reducing the principal of the loan to the property's current market value, he said. This proposal has already gained support from one House committee but drawn fierce objections from Republicans and the financial industry. Though Obama supports this provision, he declined to include it in the stimulus bill approved yesterday, fearing the bankruptcy measure would derail the overall legislation, Democratic congressional sources said.

Another provision, Frank said, would provide legal protection to lenders who reduce interest rates or otherwise modify the terms of troubled loans for homeowners. Some previous foreclosure prevention efforts have been hampered by the threat that investors who own securities backed by the mortgages would sue to block loan modifications, according to the financial services industry. WaPo

Meanwhile, banks have put a moratorium on foreclosures. How good of them.

As the administration moved closer to announcing its plan, J.P. Morgan Chase, Bank of America, Citigroup and several other lenders announced temporary moratoriums on foreclosures of owner-occupied properties. The moratorium, while temporary, gives the Obama administration some needed time, Frank said. "It takes a little of the heat off of Geithner," he said.

Obama Kansas City Town Hall Aug 26 Video

Obama talks about home foreclosures, gas prices and the lack of energy policy in the U.S.

Hillary Gave a Gift Basket

clinton is prying pennsylvania votes with suck-up promises, things she can probably never accomplish, but things that nonetheless sound really good to people who are feeling the pain of the economy.
obama in his speech in nyc, offered long term fundamental reform for the economy, and fewer promises of government support.
clinton is playing the typical political game. obama is offering truth, change and, yes, hope.
which will the low-income workers of pennsylvania choose?
here's a great story by andrew leonard at salon:

Obama does not support a five-year mortgage interest freeze or a moratorium on foreclosures -- two prominent planks of Clinton's economic agenda. One could make the argument, therefore, that Obama's approach is less far-reaching than Clinton's, or, conversely, one could argue that Clinton's wilder promises are politically unrealistic, even with a congressional majority. But the clearest difference between the two speeches is this: Hillary went to Philadelphia and promised Pennsylvania voters a gift basket of direct government assistance. Obama went to New York and made a case for long-term, fundamental change, along with a smaller gift basket.

How does that play out politically? Do working-class Pennsylvania voters care what Alexander Hamilton thought about government's role "in advancing our common prosperity" or how the repeal of Glass-Steagall plays into Wall Street's current troubles? That seems unlikely -- and the Clinton campaign was quick to seize upon that point, claiming in a press release that in his speech "Senator Obama announced a series of broad, vague principles, while offering no new concrete solutions to provide Americans with greater confidence in the market or keep them in their homes."

To which one could respond, back in 1980, Ronald Reagan announced a series of broad, vague principles, and then proceeded to drastically change the direction of American politics and economics. If we take both Clinton and Obama at their word, we have Clinton promising a boatload of quick fixes, and Obama promising a profound change of course. What unites them, in opposition to McCain, is that both understand that the U.S. is facing a real problem.

Obama on Home Foreclosures

obama on mortgage fraud
on the economy