Members on both sides of the aisle at the Senate Banking Committee blasted the administration and the industry at a hearing Thursday for not showing enough progress on loan modifications.
"It's almost like Groundhog Day … I'm frustrated we have to hold this hearing," Senate Banking Committee Chairman Chris Dodd, D-Conn., said. "This is disgraceful."
Administration officials from the Departments of Treasury and Housing and Urban Development insisted that their programs, and changes to their programs, were still in the early stages.
Herb Allison, the Treasury's assistant secretary for financial stability, said 160,000 trial modifications have begun under its home foreclosure prevention program, announced Feb. 18. The $50 billion foreclosure prevention plan uses incentives to encourage lenders to refinance loans or reduce interest rates to an affordable level. He also touted a July 28 meeting the Treasury is holding with servicers of the top 25 banks.
"Even though this crisis is several years in the making, this program just started months ago," Allison said, and predicted that coming disclosures of bank efforts would prompt laggards to step up efforts.
"Some banks were slow to recognize the enormity of this problem. … Publicizing their activities is going to have an impact on their willingness to act," Allison said.
But some lawmakers were not convinced pressure would work.
"Maybe public embarrassment is not enough for those who are not acting in good faith," Sen. Mark Warner, D-Va., said.
Lawmakers repeatedly noted that the committee began holding hearings on this two years ago, and yet foreclosures continue to outpace modifications.
"Give me a break and tell me when are you going to stop the bleeding?" Sen. Jim Bunning, R-Ky., said. (Bunning also said Federal Deposit Insurance Corp. Chairman Sheila Bair had told him up to 500 more banks could fail, but the agency denied any such estimate was provided to Congress.)
Allison repeatedly insisted Treasury has the necessary tools, but that implementing the programs would take time.
"It's the execution that I think is desperately worrisome here," said Sen. Mike Johanns, R-Neb.
Sen. Jeff Merkley, D-Ore., said that since providing capital to banks did not take long, this should not either. "Somehow it's difficult to explain how you can move so fast to assist banks, but are moving so slow to help families," he said.
Still, Allison said the administration is predicting 3 million to 4 million mortgages will be modified by the end of 2012.