Washington, DC – Oregon’s Senator Jeff Merkley urged Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan Wednesday to implement several improvements to the Home Affordable Modification Program (HAMP) to make mortgage modifications simpler and speedier for borrowers and counselors.
“We’ve done a lot to help Wall Street back on its feet, but way too little to help working families hold onto their homes. There is wide consensus that we need to do more, so it’s extremely frustrating to see that foreclosure filings continue to outpace loan modifications,” Merkley said. “I still believe that the Home Affordable Modification Program has the potential to assist troubled homeowners, but right now it’s not getting the job done. We need to simplify the loan modification process and ensure that the TARP funding allocated for loan modification is serving that purpose.”
During several meetings this summer with lenders, loan servicers, HUD-certified counselors and attorneys who represent homeowners, as well as representatives from HUD, Fannie Mae, and Freddie Mac, Merkley received recommendations for improving the complex work of modifying home mortgages.
Merkley shared the most urgent suggestions to speed up and simplify the process in a letter sent Wednesday to Secretary Geithner and Secretary Donovan:
- Electronic submission: Servicers should be required to create a single portal for submitting documents in an electronic format that can be accessed by all parties in a large loan servicer organization.
- Single Point of Contact: Each loan servicer should be required to assign a single point of contact for a given borrower so that borrowers and their counselors are not routed to a different modification agent each time they call.
- Increased Transparency: To help borrowers and counselors know where they stand in the modification process, servicers should be required to establish an error correction and appeal mechanism, and counselors should be provided with escalation contacts for each loan servicer. This will help to identify where problems are occurring and speed their correction. If a modification is denied, information should be provided indicating the reason.
- HUD-certified Counselors: Counselors play a critical role in the modification process and should be supported to a much greater degree. Loan servicers should be required to share a wider range of information with HUD-certified counselors for whom the borrower has signed a release of information authorization.
- Credit Ratings: We also need to make sure that mortgage modification programs do not unnecessarily harm borrower credit rating during the trial modification period. HAMP urgently needs a single, authoritative definition of “imminent default” so that borrowers can receive assistance before they damage their credit ratings.
In a separate letter sent to Secretary Geithner, Merkley also pushed for the release of the total actual and expected obligations of TARP funds for loan modifications offered through HAMP as of September 1, 2009 as well as month-by-month projections of these expenditures for the next six months. While the Administration committed to using $75 billion on direct modifications, it is unclear how much has actually been directed to that purpose.
“I supported the second release of TARP funds on the promise that $50 to 100 billion would go to help families keep their homes. Six months after the announcement of the Treasury program, we still have no accurate information on how much has been obligated. This information should be provided immediately to give Congress and the American public a better understanding of Administration’s efforts to help homeowners,” Merkley said.