Lenders Pressed to Hurry Help

Washington Post (05/07/08) P. D3; Merle, Renae
A closed-door session on May 6 involving Treasury Secretary Henry Paulson Jr., executives from Fannie Mae and Freddie Mac and members of the Hope Now Alliance focused on the need for mortgage lenders to offer more assistance to struggling borrowers in a more timely manner. While Hope Now says 1.3 million loans were negotiated from July 2007 through March 2008, Treasury officials note that a majority involved repayment plans that boost borrower fees and penalties and do not constitute much-needed permanent loan modifications. A hot topic discussed at the meeting was how to handle modifications when two loans are involved and owned by different companies, and Treasury officials said an agreement between first and second lenders was being worked out so that modifications would not be delayed. However, nonprofit groups point out that homeowners wind up farther behind in their mortgage payments as they wait the three-plus months it takes to obtain permission to modify loans. Federal Reserve Chairman Ben Bernanke recently noted that traditional measures to avoid foreclosure might not be successful in the current market.