US plan to modify mortgages making slow progress
US Treasury official voices frustration
LOS ANGELES - Somewhere on Earth, there must be a more difficult task than persuading mortgage companies to lower payments for homeowners who can no longer afford their loans.
But Karina Montenegro strains to imagine a more futile pursuit. An intern at a company that seeks loan modifications, she dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns the documents her company sent in have vanished - for the third time.
“I don’t know what happened,’’ says a customer service officer, Chris. Think of the documents as being part of a pile massing inside the bank, Chris suggests.
It is a potent indication of the difficulties afflicting the $75 billion taxpayer-financed program created by the Obama administration in an effort to avoid foreclosure for as many as 4 million homeowners. Under the plan, the government offers mortgage companies $1,000 for each loan they agree to modify, then another $1,000 a year for up to three years.
The administration portrays its program as a crucial piece of its broader effort to restore vigor to the economy. If the effort fails, foreclosures will continue to surge and home prices will probably keep falling, sowing fresh losses in the financial system and threatening to crimp credit anew.
Yet in the four months since the Treasury Department announced the program, millions have slipped into delinquency and foreclosure. Progress is constrained by the limited capacities of mortgage servicing companies, said Michael S. Barr, assistant Treasury secretary. He offered the first signs of the administration’s impatience with the institutions that control home loans.
“They need to do a much better job on the basic management and operational side of their firms,’’ Barr said. “What we’ve been pushing the servicers to do is improve their infrastructure to make sure their call centers are doing a better job.’’
The administration still does not know how many mortgages have been modified. Barr estimated the number at “over 50,000,’’ explaining that precise figures must wait for a soon-to-be-completed tracking system. By the end of August, the program should produce 20,000 modifications a week, he said.
Tom Kelly, a spokesman for JPMorgan Chase, which owns Washington Mutual, affirmed the administration’s criticism. “We’ve done a lot,’’ he said, noting the bank has added 950 loan counselors since the beginning of the year, bringing the total to 3,500. “But we’ve got a lot more to do.’’