U.S. Treasury officials announced Monday that the department would be launching a nationwide campaign to help homeowners make trial mortgage modifications permanent.
Speaking at a telephone briefing, Assistant Secretary for Financial Institutions Michael Barr and Phyllis Caldwell, chief of the Treasury's Homeownership Preservation Office, said the Obama Administration would increase pressure on lenders to help borrowers make their mortgage modifications permanent.
Barr said that the Treasury has taken efforts to streamline the permanent modification application process and will continue to do so - including publishing specific servicer modification rates - but it is now up to banks and servicers to do their part to help borrowers.
He added that representatives of the mortgage lenders will be asked next week to meet with members of the Treasury to discuss ways to help borrowers achieve permanent modifications. He added that servicers will also be required to update the Treasury on the status of their modifications two times a week.
Both Barr and Caldwell said that borrowers must also do their part to ensure that their trial modifications become permanent.
Caldwell pointed out that 375,000 borrowers are currently eligible for permanent modification by the end of 2009, but only one-third of those borrowers have submitted full documentation for a permanent modification. She added that 37 percent of borrowers have not submitted full paperwork, and about 20 percent have submitted no documentation.
She went on to say that lenders will be required to submit plans to help borrowers who have not submitted full documentation, and also said that the Treasury would work and reach out to borrowers to help them submit full documentation for permanent modifications.
Earlier in the day, the Treasury said in a statement that lenders could face sanctions if they do not fulfill their requirements to lower monthly mortgage payments under the $75-billion Home Affordable Modification Program, which has been under close scrutiny since its inception earlier this year.
According to the statement, more than 650,000 borrowers have received trial modifications under the HAMP, which provided a $1,000 cash incentive to servicers once a loan modification is made permanent.
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