Posts (RSS)Senators Urge Geithner to Solve Foreclosed Home Problem
The cry of homeowners struggling with the foreclosed home crisis has definitely touched a lot of Democratic senators as shown in their open letter addressed to U.S. Treasury Secretary Timothy Geithner.
The senators called on Secretary Geithner to step up pressure on lenders to help distressed homeowners in order to stop the continued growth of foreclosed home inventories in many areas.
The open letter, posted on the web site of the U.S. Senate Banking Committee, said that large numbers of troubled homeowners are not getting responses from their lenders despite following instructions and submitting needed documents. There are a lot of cases of documents getting lost and loan modification processes discontinued because of lack of authorized personnel to work out with borrowers.
Christopher Dodd, chairperson of the Banking Committee, and 18 other senators called on Secretary Geithner to ensure that mortgage lenders and servicers are providing real relief to distressed homeowners. They reiterated that the recovery and stability of the U.S. housing market cannot be achieved if foreclosed home inventories continue to get filled.
Senator Jack Reed reminded officials that mortgage servicers and lenders need to recognize their obligation to help contain the foreclosure problem because they were rescued with taxpayer money. Besides, as many other housing analysts have argued, the mortgage industry contributed to the foreclosed home problem because they did not implement responsible lending regulations.
The country’s biggest mortgage lenders and servicers, including Wells Fargo, Bank of America and JPMorgan Chase, have received rescue money from the U.S. Treasury to prop up their capital levels.
It has been four months since the Obama administration launched its Making Home Affordable program, but it has not monitored well the progress of its program. It does not have accurate figures on the number of units it has saved from foreclosed home inventories.
Nevertheless, the U.S. Treasury Department recently a report showing that almost 200,000 homeowners were offered with affordable repayment schemes since the launching of the program.
In the open letter, the senators pointed out the finding by the National Foreclosure Mitigation Counseling Program that loan modification and refinancing applicants wait for about 45 days to 60 days before they get a response from lenders.
According to researchers at the Center for Responsible Lending, about 2.4 million borrowers are in danger of foreclosure this year. Lenders therefore need to step up their loan modification activities to contain foreclosed home inventories.