Personal Finance and Investing

The U.S. government through the Treasury Department has decided that it‘s time to put some pressure on the banks in the area of mortgages. As most people know, there are millions of consumers unable to make their mortgage payments in a timely manner. Troubled mortgages continue to grow in numbers as more consumers fall behind on their house payments, and the government feels the banks have not done enough to help homeowners prevent foreclosure.

The Assistant Secretary for the Treasury Department, Michael Barr, was quoted in the press as publicly stating that mortgage companies need to do much more to assist people behind on their payments or who are having difficulty meeting current payments. He also believes the banks need to speed up the process of redoing mortgage loan agreements. The pace of loan modifications has been extremely slow.

It has proven to be quite upsetting to consumers that banks were given huge bailouts of taxpayer dollars but are slow to assist mortgage holders needing their payments lowered so they don’t lose their homes. There are people have paid on their homes for 20 or more years that are being foreclosed on. Now the government has decided to step in and force greater accountability on the part of banks. The goal is to get banks to increase the number of permanent mortgage modifications.

The Treasury Department representatives are meeting with bank officials the week beginning 30-November-2009 to discuss how the lenders can do a better job of assisting homeowners. The interesting fact to note about this is that the government cannot force the banks to do a better job with mortgage modifications. In effect the government plans to try and shame the banks that have not been cooperating into doing more by embarrassing the banks.

The process of shaming the banks will include naming those banks with the lowest rates of loan modifications.

The Treasury Department instituted a temporary mortgage modification program that is still in the trial stage. But most of those mortgage amendments remain temporary and have not become permanent modifications. Consumers are having a difficult time getting lenders to respond to their requests for assistance, and the entire process of modification is too cumbersome and takes too long.

One of the features of the mortgage modification program expected to emerge with this new government pressure on banks is the creation of additional resources for homeowners needing financial help. President Obama has vowed to help Americans needing their mortgages modified and wants to slow the rates of foreclosure even as the nation’s unemployment rate continues to climb.

One of the ways the government can put pressure on the banks is refusing to give the lenders any additional federal dollars until they show improved performance in the area of rates of permanent mortgage modifications completed. The Treasury Department intends on making program refinements as necessary. With increased lender accountability and transparency the government fully expects lenders will step up the pace of rewriting mortgage loans.

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