WASHINGTON – Expressing frustration at the slow pace of a key program, Oregon Sen. Jeff Merkley is pressing federal officials to explain why $75 billion in funding to help people avoid foreclosure is not flowing faster to people in need.
In a pair of letters this week to Treasury Secretary Timothy Geithner and Shawn Duncan, who heads the Department of Housing and Urban Development, Merkley voiced his unhappiness.
“I am writing again to express my frustration that foreclosure filings continue to outpace loan modifications,” Merkley wrote. “I believe that the Making Home Affordable program has more potential to help troubled homeowners.”
And today, Merkley pressed a Treasury official during a Senate hearing.
“To date … we have spent, out the door, $288 billion to the banks, $76 billion to the auto industry, and … $270,000 according to (the independent General Accountability Office) for our homeowners,” Merkley told Assistant Treasury Secretary Herbert M. Allison.
Allison said the agency is improving and that the start-up problems have been addressed.
“We are working with servicers to try to implement as fast as we can, streamlined procedures for people to get into this program,” Allison told Merkley.
“I want to point out that this crisis has gone on for two years. When the Obama administration got into place, they put in effect this program, which is by far the largest mortgage modification program ever attempted. It’s already the most successful, even though it’s not nearly close to the numbers that we want to see,” he said.
Merkley has a special attachment to the program. The money was added by the Obama administration at the insistence of Merkley and other senators in return for their support last January of legislation to release $350 billion in funds to save faltering banks.
As written, the program intents to help an estimated 9 million people lower their monthly mortgage payment. To qualify, the loans have to be owned or guaranteed by quasi-federal lenders Fannie Mae or Freddie Mac.
While government officials say the program has picked up speed, Merkley and other says there is more to do. This is no academic exercise for many in Oregon. The state’s foreclosure rate the fifth highest in the nation, according to RealtyTrac, with the number of home in foreclosure up 218 percent from 2007.
“Right now, servicer handling of modifications is a black box,” Merkley said in his letter to Geithner and Donovan.
“Borrowers and counselors should know where they stand in the process and be able to identify and ameliorate obstacles to their modification. 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,” the letter said.
Merkley also recommended several changes that he said would make the system more efficient and easier to use. They include using a “single portal” through which all documents can be submitted; a single point of contact for people trying to navigate the complicate process; and providing more “transparency” to the program.
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