The Treasury's chief architect of the housing rescue program, Asst. Secretary for Financial Institutions, Michael Barr, admitted to a House Financial Services Subcommittee this morning:
It doesn't mean that there is perfection out there in the world. There are lots of lots of problems in program implementation; that could be done better. That needs to be done better. There is unevenness in performance as you can see from our public reports, unevenness in performance among and between the servicers involved. We think all the servicers could do more than they are doing now.
But House Financial Services Committee Chairman Barney Frank, a big proponent of the bankruptcy modification option, saw the servicers' lack of progress another way:
The best lobbyists we have for getting bankruptcy legislation passed are the servicers who are not doing a very good job of modifying mortgages. If they do not improve their performance, then they improve the chances of that legislation.
Chmn. Frank hopes to have it included in a financial regulatory bill this fall. In an interview right after the hearing, I asked Barr what he thought of resurrecting the bankruptcy option yet again.
The President has been a proponent of bankruptcy reform. We tried to get that enacted last year as a way of getting borrowers not eligible for modification a last resort and opportunity for going through bankruptcy. The first and best answer's got to be let's figure out a way of keeping people in their home is with a modification, and that's where we're focused.
- Watch my interview with Michael Barr here
Real Estate Slideshows on CNBC.com
Questions? Comments? RealtyCheck@cnbc.com