Are You In Loan Modification Hell? Maybe For Not Much Longer
If you've been in loan modification hell, you've probably been wondering how much longer it can last.
Perhaps not that much longer. After calling mortgage lenders and servicers to the table for a private meeting of the Mortgage Lenders Club, the Treasury Department announced this morning that it would be applying more pressure on mortgage lenders and servicers to convert many of the temporary loan modifications to permanent status.
What kind of pressure? According to news reports, Treasury officials will try the following:
- Embarrassing lenders. Whether this involves a social networking campaign or taking out ads in the newspaper or just calling out various lenders and servicers by name hasn't been made explicitly clear just yet. But somehow, Administration officials say they will embarrass lenders into doing more for borrowers.
- Requiring daily progress reports. Just like parents regularly check to make sure their kids are doing their homework, the government will now require daily reports on the status of all loans in temporary loan modification status and when those loans will be made permanent. Lenders must begin using new software as of December 1, 2009 that will help the government measure trial period loan setup data, trial period loan activity, official loan setup data, and assist with servicers' official monthly reporting.
- Withholding payments from lenders that aren't doing enough to help homeowners. Lenders and servicers are eligible for payments once trial loan modifications are made permanent. But evidence is growing that the Treasury Department has actually been paying loan servicers to put in applications for trial loan modifications.
I think we'll hear more soon about whether the government has actually been making payments for applications only and for getting borrowers into temporary loan modifications against its stated regulations, which may be another reason why borrowers aren't getting the help they need. After all, would you rather collect $1,000 for putting in an application (over and over again in some cases) or would you rather collect $3,000 for doing all the work required to get that borrower into a permanent loan modification.
If you know whether the government has been paying out on loan modification applications, I'd love to hear from you, either as a comment to this blog, or privately through email: ilyce@thinkglink.com.
Read More:
- Shaun Donovan: FHA Needs To Change
- Treasury Tells Mortgage Lenders To Do More For Homeowners
- Are You In Loan Modification Hell? Join The Club
- Underwater? Maybe You Should Walk Away From Your Mortgage
- Recession Over? Not With 21 Percent Unemployment
