The Treasury Secretary Takes on the Mortgage Meltdown
I rushed into work this morning, after massive flight delays getting back from Michigan last night, because I was eager to hear what the Treasury Secretary and our nation's top mortgage lenders had accomplished in the struggle to save thousands of cash-strapped mortgage borrowers.
The press conference was billed as an announcement of "the formation of a new alliance that will develop strengthened efforts to help struggling homeowners keep their home." Excellent news, I thought. Finally a chance for me to report something positive, in the midst of all the negative number nattering that I'm usually forced to do.
I arrived at the Treasury Department bright and early and headed for the "Media Room." The back of the room was lined with cameras, but curiously most of the chairs were filled with folks bearing yellow badges. This shows that they are "Visitors" to the building, as the press badges are red.
I sat down next to a friendly-looking fellow who introduced himself as a "legislative liaison" for Assurant, Inc. In other words, a lender's lobbyist. He asked what I thought of this announcement, and I said, well, I looked forward to hearing what they had to say and hoped that there was some real substance, not just more talk about more communication with borrowers and more counseling.
Oh well. "Hope Now" is an initiative, the result of the President's edict to the Treasury Secretary last month, that brings mortgage lenders into one alliance, which will:
- Explore a variety of methods to reach out to at-risk homeowners, including a direct-mail campaign to encourage at-risk borrowers to call their mortgage servicer or a credit counselor.
- Work to improve communications between servicers and non-profit counselors to speed outreach and to develop and explain options for at-risk borrowers.
- Develop standards with investors to enable counseling sessions for homeowners to be funded by servicing contracts.
I threw out a question once all the speakers were done: Counseling is all well and good and communication is the right direction, but all these folks in trouble took out ARMs because they couldn't afford the 30-year fixed, because they were biting off more than they could chew and no amount of re-financing them is going to account for the fact that they just can't afford the house they're in. How do you help them? I'll give the Treasury Secretary credit. He admitted this was in no way a panacea and many borrowers were too far gone to help. He said it's a start.
And he's right. According to the mortgage bankers association, 50% of people who seek counseling or go to their lenders for help, end up staying in their homes with new mortgage products. Of course 50% don't, but still.
My biggest disappointment was that I wanted to talk to an actual lender, find out about the dreaded pre-payment penalties and the realities of refis. The Co-president of Wells Fargo was there; in fact he was one of the speakers. I approached him literally 30 seconds after the Treasury Secretary ended the conference. I asked for one question on camera. He said he was in a hurry (this after 45 minutes of speakers), had to go, gave me his card to schedule a future interview. One question? Two minutes? No.
Come on! I realize I'm now going to get complaints from the folks at Wells Fargo, saying I'm being unfair, but in my opinion, which, by the way is what this blog is about, not my reporting, in my opinion if you call a press conference, and put yourself up as a speaker in the conference, then it's your duty to actually speak to the press.
My questions are legitimate, and I'm not out to say that this initiative is just fluff. It has substance. It's appalling to me that around half the people in foreclosure today never even contacted their lenders for help. That's a true fact that I've heard elsewhere. Communication and counseling is necessary, and I'm frankly glad to see the industry getting aggressive about it. But if you're going to answer the easy questions, then you have to take the tough ones too.
Questions? Comments? RealtyCheck@cnbc.com