Reed Encouraged By Administration’s Efforts to Help Homeowners by Demanding More Accountability from Banks and Loan Servicers

WASHINGTON, DC – July 10, 2009 – (RealEstateRama) – As foreclosure rates around the country continue to rise, it has become increasingly difficult for many homeowners seeking to modify their mortgages to get a hold of their loan servicers. In response to concerns raised by U.S. Senator Jack Reed (D-RI), his colleagues, and others, the Administration today announced new steps to track the performance of servicers in responding to qualified homeowners seeking assistance. 

U.S. Treasury Secretary Timothy Geithner and Housing and Urban Development (HUD) Secretary Shaun Donovan sent a letter to the CEOs of the 25 companies participating in the Administration’s foreclosure prevention program urging them to devote more resources to responding to the rising number of requests for help. Companies were also told to designate staff and submit written plans to work on the issue in preparation for a July 28th meeting with senior Treasury and HUD officials.

“In order to stabilize the economy we need to stabilize the housing market. The steps outlined by the Administration will help ensure that these companies do what is right and meet the rising number of requests from struggling homeowners. I applaud Secretary Geithner and Secretary Donovan for holding loan servicers and banks more accountable, and urge the Administration to keep pushing to make certain that servicers’ public pronouncements translate into relief for homeowners,” said Reed, a senior member of the Banking Committee, which oversees federal housing policy.

Reed has been urging the Administration to use its leverage to help struggling homeowners by holding banks and loan servicers accountable for requests to help. In June, he sent letters to both Secretary Geithner and Secretary Donovan, asking them to develop and implement a strategy requiring banks and loan servicers, particularly those that have agreed to participate in the Obama Administration’s foreclosure prevention initiatives, to respond to homeowners in a timely fashion.

Reed originally raised this issue with Treasury’s Assistant Secretary for Financial Stability Herbert M. Allison, Jr. He urged Treasury to consider collecting data on the volume of homeowner inquiries, average response time, and number and type of workouts offered to ensure that servicers make good on their commitments to help responsible homeowners.