Fallout: The Financial Crisis

Banks must improve loan modifications

Tamara Keith Jul 10, 2009
HTML EMBED:
COPY
Fallout: The Financial Crisis

Banks must improve loan modifications

Tamara Keith Jul 10, 2009
HTML EMBED:
COPY

TEXT OF STORY

KAI RYSSDAL: The White House has spent a lot of time and energy and political capital on home loan modifications. The administration’s Making Home Affordable program is supposed to modify mortgages for as many as 4 million people at risk of losing being foreclosed on. Today, Treasury Secretary Timothy Geithner let it be known he thinks banks and loan servicing companies aren’t doing their part. And he’s going to be watching.

From Washington, Tamara Keith has more.


Tamara Keith: Rena Somar is a counselor at Neighborhood Housing Services of Baltimore, Md. She guides homeowners through the often frustrating process of getting a loan modification. Somar spends a lot of time calling loan servicing companies.

And holding, for 20 minutes, sometimes 45. But the waiting doesn’t stop there.

Somar says some servicers have told her it will take as much as 90 days to consider a clients application.

Rena Somar: When you call an ask them, why is it taking so long? “Well ma’am, this is because there are so many people that we’re trying to resolve.” I believe they are, I believe they are. It’s just, I wish they could just tell the client yes or no.

The letter sent to loan servicers makes it clear, the Obama administration has heard these complaints and is applying pressure. The Treasury Department will soon release information about how many loans each servicer has modified, so it will be easy to tell which companies are doing a good job and which ones aren’t. Treasury is also tracking things like telephone hold times and how long it takes to process an application.

Faith Schwartz is the executive director of the Hope Now Alliance, which includes all of the major banks and loan servicers.

Faith Schwartz: This is tricky. It is an unprecedented volume. But I believe they’re getting their arms around it and you’ll just see a better outcome in a couple of months than you’re seeing today.

Servicers say they’re hiring staff quickly and trying to get up to speed on what is still a new program. Schwartz’s advice to homeowners? Be tenacious. And patient.

In Washington, I’m Tamara Keith for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.