Geithner Slams Loan Servicers

I have to say I'm getting a little tired of it.

Timothy Geithner
Photo by: Pete Souza
Timothy Geithner

The servicers slam the Treasury and the Treasury slams the servicers and more and more homes move to foreclosure as the housing recovery spits and sputters.

A few weeks ago members of the nations large banks told the committee overseeing the TARP that the Treasury's Home Affordable Modification Program was seeing pitiful results because it was so slow in coming, so constantly changing and so bureaucratically unpalatable.

They also said the new provision that they consider principal write down was at best a slippery slope and at worst unfair.

Today the Treasury Secretary Timothy Geithner fired back in testimony to the Senate Committee on Appropriations:

"I want to be clear that we do not believe servicers are doing enough to help homeowners not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure.

We are concerned by the wide variation in performance we see across servicers and by the countless frustrated phone calls we receive from borrowers. We are troubled by reports that servicers have foreclosed on potentially eligible homeowners, or that they have steered these borrowers away from HAMP and into the bank's own modification program. That they have lost documentation, or claimed to. That they are not responding to the needs of responsible and increasingly desperate homeowners.

None of this is acceptable. We are committed to making sure that servicers hold up their end of the bargain. We are conducting targeted, in-depth compliance reviews. We are compelling servicers to re-review groups of mortgages or their entire book for eligibility. And in circumstances where servicers are not compliant we will withhold incentives or demand their repayment.

And we will soon publish much more detailed data on the performance of servicers to hold them accountable to the public so that both members of Congress and the homeowners in your communities can assess for themselves the performance of these servicers.

It seems that time might be better spent focusing not on how to fix an ill-fated bailout, but on how to keep homeowners from needing that bailout in the first place."

Tomorrow the home buyer tax credit expires at midnight.

This was a program that helped people buy homes, plain and simple, and it served to stabilize home prices at least temporarily.

I’m not saying I'm a huge fan of government intervention in the housing market; anyone who reads this blog knows I'm not. But I'm a bigger fan of getting the housing market back on its feet than I am of helping certain troubled borrowers get back on their feet, when we know, owing to their tenuous financial situations, that they will likely fall again.

Questions? Comments?