Senior U.S. housing officials and leading mortgage companies on Tuesday will make a fresh commitment to help troubled borrowers keep their homes and will promise to expand foreclosure-prevention aid, sources familiar with the plans said.
Executives from 25 mortgage service companies will spend much of the day in working meetings to trouble-shoot the foreclosure crisis and brainstorm with officials from Treasury and the Department of Housing and Urban Development.
Michael Barr, the Treasury assistant secretary for financial institutions, will host a 90-minute meeting with HUD senior adviser William Apgar and David Stevens, the head of the Federal Housing Administration, said several sources.
Officials have warned the mortgage industry that it must do more to keep families in their homes and plans to name and shame firms that are not reaching enough troubled borrowers, the sources said.
The Treasury and Department of Housing and Urban Development are asking servicers to boost resources beyond what they have planned to deal with the onslaught of defaults and foreclosures, Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan said in a recent letter.
Three years into a housing crisis of record defaults, many efforts to aid homeowners are hamstrung with red tape.
Industry sources said homeowners are burdened with cumbersome paperwork and companies are overwhelmed trying to help consumers.
The Treasury's demands include expanding call centers, providing an outlet for borrowers dissatisfied with services received, and bolstering training, Geithner and Donovan said in the letter.
Monthly reports on modifications and their success at each servicer will be issued beginning August 4, they said.
Officials and mortgage servicers, the companies that collect payments from borrowers, expect to have agreed principles that they can present after the all-day meetings.
One in five homeowners owe more on their mortgages than their property is worth, putting them at risk of foreclosure if they lose their job or face another crisis.
(Reporting by Patrick Rucker and David Lawder; Additional reporting by Al Yoon in New York; Editing by Leslie Adler)