US Treasury Department
secretary Timothy Geithner, speaking today before the Senate Subcommittee on Financial Services, came down hard on mortgage servicers participating in the Home Affordable Modification Program (HAMP).
"I want to be clear that we do not believe servicers are doing enough to help homeowners, not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure," he said in prepared remarks
The Treasury launched HAMP in March 2009 to provide capped incentives to servicers for the modification of loans on the verge of foreclosure. Treasury initially projected 3m to 4m borrowers could be helped, although as of March 2010 HAMP servicers converted 227,922 of more than 1m trial modifications
into permanent status.
The lag in permanent HAMP modifications more than a year after the program's launch is not lost on the the Congressional Oversight Panel (COP), which earlier this month criticized
the program's initial lack of drive.
“It now seems clear that Treasury’s programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble,” the COP wrote in the April Oversight Report, adding that HAMP will likely result in only a fraction of the 3-4m projected borrowers receiving help, and only some of those modifications will convert to final, five-year status.
Geithner's statements today respond to the concern that servicers are not keeping up with the program's goals. He said the Treasury is "concerned" by reports of servicers foreclosing on potentially eligible homeowners, steering borrowers into internal modification program rather than HAMP, and losing borrower documentation.
"We are conducting targeted, in-depth compliance reviews," he told the Subcommittee. "We are compelling servicers to re-review groups of mortgages, or their entire book, for eligibility. And in circumstances where servicers are not compliant we will withhold incentives or demand their repayment."
He noted the Treasury will soon publish much more detailed data on the performance of servicers, "to hold them accountable" for their progress in HAMP.
Write to Diana Golobay