Yesterday, amid criticism that the Obama Administration’s Making Home Affordable (MHA) Program has not done enough to prevent foreclosures, members of the Administration held a closed door meeting with top executives and servicers participating in the MHA Program. The purpose of this meeting was to discuss ways to improve the effectiveness and efficiency of the MHA Program. The meeting was led by Treasury Assistant Secretary for Financial Institutions, Michael S. Barr; Treasury Assistant Secretary for Financial Stability, Herb Allison; FHA Commissioner, David Stevens; and HUD Senior Advisor to the Secretary, William Apgar.
Treasury Secretary Geithner commented that there are over 200,000 loan modifications already underway. He went on to state “[s]till, too many homeowners are at risk of foreclosure right now. Today’s meeting was an opportunity to identify ways to accelerate the program and bring relief faster.”
Expressing his expectation that the outcome of the meeting would improve the MHA Program, HUD Secretary Shaun Donovan stated, “I am confident that the best practices shared today, combined with more transparent reporting methods, better communication among all parties, and a strong commitment from servicers, will ensure that we can ramp up the MHA program’s pace to meet these ambitious goals.”
The steps that the Obama Administration has taken to improve the overall effectiveness and efficiency of the MHA Program include:
- Starting on August 4, publicly reporting the results under the MHA Program based on servicer-specific performance, including the number of trial modification offers each servicer has extended to eligible borrowers, the number of trial plans that are underway, the number of final modifications, and eventually, the long term success of those modifications;
- Working with servicers to set more exacting operational metrics to measure the performance of the program, such as average borrower wait time for inbound borrower inquiries, the completeness and accuracy of information provided applicants, document handling, and response time for completed applications; and
- Asking Freddie Mac, in its role as compliance agent to develop a “second look” process, whereby Freddie Mac will coordinate with servicers to address specific cases that arise and to address general operational weaknesses where errors prove more systematic.
The servicers in attendance made a commitment to significantly increasing the rate at which they are performing loan modifications. Additionally, the Obama Administration has set a goal to have half a million trial modifications underway by November 1, 2009.