Current Events: Latest Treasury Department Announcement
WASHINGTON (Associated Press) - Treasury Department officials yesterday announced plans to increase pressure on the 71 mortgage companies participating in the government's $75 billion loan modification program. They will start this week by sending three-person "SWAT teams" to monitor the eight largest companies' work and requesting twice-daily reports on their progress. Next week, they will publish a list of the mortgage companies that are lagging.
Kathy's commentary: Really? A SWAT team? Twice-daily reports? (As if the banks weren't overwhelmed as it is.) I thought these banks had agreements with borrowers, not the government. Anyway, the only way loan modifications can work in the long run is if the principal balance is reduced - and that's usually not the case. If anything, these band-aid modifications will only postpone the problem a few months or years. Mark Fleming, chief economist of First American Core Logic, said negative equity "lowers homeowners' mobility because they can't move, even if they want to move to get a new job. Borrowers who owe more than 120% of their home's value are more likely to default."
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