The report card issued by the Treasury Department today shows that financial companies deserve a failing grade in their voluntary efforts to modify home loans to help restore the U.S. economy. The results reveal that only 15 of every 100 families who are eligible for a modification of their mortgage have been offered one. That's 85 distressed families left with the prospect of losing their home for every 15 offered a helping hand.
We applaud the Obama administration for providing data from individual loan-servicing companies to shed greater light on how tax dollars are being spent. This is a major step in holding lenders accountable by keeping the public informed.
Unfortunately, the numbers show that too few people behind on their mortgages are being reached. While the number of families receiving help has increased during the past few months, the number of struggling homeowners continues to outweigh mortgage modifications by a wide margin. In June this year alone there were 254,000 foreclosure starts, which is more than the total number of modifications made to date under the current program.
The same lenders who have received a taxpayer bailout have spent millions of dollars lobbying against a reasonable solution to the foreclosure crisis that would require no tax funding: allowing judges to modify primary mortgages in bankruptcy courts. For over three years, lenders have insisted they can handle this crisis on their own, but today's report shows that the time for voluntary action is over. We urge Congress and regulators to:
- Lift the legal barriers that now keep homeowners from seeking reasonable relief through bankruptcy court.
- Publish more detailed information on loan modifications.
- Reform the broken lending market by creating the proposed Consumer Financial Protection Agency so that we can avoid another financial crisis in the future.
For more information: Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org; or Charlene Crowell at (919) 313-8523 or charlene.crowell@responsiblelending.org.