Mortgage Servicers Promise to Boost Loan Modifications

A number of leading mortgage servicers have pledged to accelerate their loan modification efforts following a meeting with administration officials in Washington Tuesday, the U.S. Treasury Department reports.

The meeting, according to U.S. Treasury Secretary Timothy Geithner, provided an opportunity for officials and industry leaders to find new ways to step up the program. Geithner added that too many homeowners remain at risk, and the new solutions will help relieve them faster.

The Making Home Affordable program has resulted in over 200,000 loan modifications since its launch, a far cry from its initial goal of 4 million borrowers. The government has since reworked its goals and plans to bring the number up to 500,000 by November.

Mortgage Bankers Association (MBA) spokesman John Mechem said that servicer CEOs and government officials agreed to refine the loan modification process and set more consistent rules on handling applications, particularly those backed by Fannie Mae and Freddie Mac.

During the meeting, a number of representatives also criticized the numerous “piecemeal changes” made by the administration since the program’s launch, according to MBA chief economist Jay Brinkmann.

Brinkmann added that such programs should not be announced before they are fully planned out. He said that they bring in lots of calls from curious borrowers, which clogs their call centers and slows down other services.

Making Home Affordable is carried out by banks that received federal assistance from the Troubled Asset Relief Program (TARP), including Fannie Mae and Freddie Mac. The plan requires them to modify the loans of at-risk borrowers to reduce their monthly payments, either through term extensions, forbearance, and lower interest rates.