U.S. Treasury Secretary Timothy Geithner criticized mortgage servicers yesterday for not doing enough to help troubled homeowners avoid foreclosure. In a prepared statement before the Senate Appropriations Committee, Geithner said, “We do not believe servicers are doing enough to help homeowners; not doing enough to help them navigate the difficult and frightening process of avoiding foreclosure.” The Senate Appropriations Committee is one of the most powerful committees in the United States Senate.
Geithner continued by saying, “None of this is acceptable,” and indicated the Treasury Department would begin conducting “targeted, in-depth compliance reviews” of mortgage servicers to ensure they are doing their part to help struggling homeowners avoid foreclosure.
Geithner’s strong words for mortgage servicers comes on the heels of a statement made in March by Herbert M. Allison before the Committee on House Oversight and Government Reform. Allison, the Assistant Secretary for Financial Stability and Counselor to the Secretary of the Treasury, announced amendments to the Home Affordable Modification Program (HAMP) that would effectively force mortgage servicers to provide more help to homeowners facing foreclosure.
Mortgage servicers have been accused of losing documents while continuing to foreclose on properties of homeowners who may have been eligible for relief. In reference to incentive fees paid to mortgage servicers by the federal government for assisting homeowners avoid foreclosure, Geithner specified, “In circumstances where servicers are not compliant, we will withhold incentives or demand their repayment.”
In addition, the Treasury Department’s upcoming ranking system of mortgage companies and how they deal with struggling homeowners will be published and widely distributed. This sort of “shame list” will undoubtedly compel mortgage servicers to curtail their approach as Congressional leaders, as well as everyday citizens, will see how they rank. It will ultimately be a public relations testimonial for the companies, but it will be up to them if it will be good or bad.
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