WASHINGTON — A group of Senate Democrats is leaning on the Obama administration to increase pressure on mortgage servicers to help strapped borrowers more quickly and effectively.
The senators, in a June 24 letter to Treasury Secretary Timothy Geithner, expressed concern that too many borrowers are being shut out of the administration's foreclosure prevention program. They also cited long delays before borrowers receive any response from servicers.
"Without servicers taking proactive steps to reach these homeowners and careful vigilance on the part of the Department of Treasury and others to ensure that outreach translates into real relief, efforts to stabilize the housing market could be undermined," Banking Chairman Christopher Dodd, D-Conn., and 18 of his colleagues wrote in the letter.
The letter was posted on the Senate Banking Committee Web site Monday. In a statement accompanying the posting, Dodd said that "more needs to be done" to help families stay in their homes. Sen. Jack Reed, D-R.I., said the servicers "must be held accountable, especially when they are simultaneously receiving taxpayer dollars."
The three largest mortgage servicers — JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America — all received capital injections from the federal government as part of its financial industry rescue.
Four months after launching its foreclosure prevention program, the administration does not have firm numbers on how many people it has helped. Nearly 200,000 have been offered modified loans with lower monthly payments, the Treasury Department says.
Servicers will have to speed up their progress dramatically to keep pace with soaring delinquencies. According to the Center for Responsible Lending, 2.4 million Americans are at risk of foreclosure in 2009.
In their letter, the senators cite data from the National Foreclosure Mitigation Counseling Program showing that homeowners are waiting, on average, 45 to 60 days for a response from servicers.
The senators pumped Geithner with questions on his strategy to improve servicer responsiveness. They also asked whether he needs more legislative tools to encourage servicers to respond faster to homeowners.