05-05-08

The Treasury Department is planing on putting pressure on mortgage companies and banks to do more to help troubled homeowners. Officials have called for a six hour meeting on 05-06-08 which will address the time it takes to modify mortgages and to help streamline the modification process across all lenders.
The 10 lenders expected to take part on these talk and the most likely to adopt these measures would be: Countrywide, Bank of America, Citigroup, JP Morgan Chase, and officials from Fannie Mae and Freddie Mac.

However the results of the meeting and any agreements made are likely just to be voluntary and to be use as a guideline only. There will no legal responsibility from any of these banks to enforce these measures. Democrats are threatening harsher industry regulation if the Republicans can not act in a speedy manor to help troubled homeowners. Many homeowners have professed that even after months and months they still would not be informed on the status of their mitigation. This often causes further hardship and the homeowner could often slip into foreclosure while waiting to hear their status. This process needs to be streamlined and executed in a speedy manor for the sake of all involved. It will be proposed at tomorrows meeting that banks must respond to a mitigation inquiry within 5 days, this measure is likely to be past but then again it is simply a guideline.

Bernanke seems to be in favor of the Democratic plan to write down troubled mortgages and have the FHA refinance them into a new fixed rate program, he is quoted as saying: “the best solution may be a write-down of the principal or other permanent modification of the loan by the servicer, perhaps combined with a refinancing by the FHA or another lender.”

Also in a speech given on Monday Barney Frank of the House Financial Services Committee urged the Mortgage Bankers Association in Boston warned that if no action is taking there will harsher regulation on the whole industry which would naturally affect how these banks do business and it is of vital importance that current issues be address and addressed satisfactorily enough that such harsh regulation does not come to light.

More information will be made public after the meeting.