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Washington
Treasury to increase mortgage servicing monitoring
WASHINGTON (12/1/09)--The U.S. Treasury Department announced on Monday that it will require that mortgage lenders report their plans for increasing the number of successful modifications of troubled home loans and will increase its monitoring of mortgage servicing companies. The Treasury plan would seek to increase the number of troubled mortgages that are converted into new home loans with reduced monthly payments, and would not pay proposed cash incentives to participating mortgage companies until their loan modifications, which are intended to lower costs for homeowners, are made permanent. The Treasury will increase its monitoring of banks and mortgage companies through daily reports on the progress of individual mortgage lenders. Under the plan, the Treasury will also impose monetary penalties and sanctions on lenders and servicers that do not meet their obligations to mortgage holders. The Obama administration has also extended the period for trial modifications that began on or before Sept. 1. The Treasury will also streamline the mortgage modification application and submission process and will provide additional resources for borrowers, including housing counselors, through the makinghomeaffordable.gov web site and an 888 hotline. The Treasury’s foreclosure prevention plan has over 650,000 participants at this time, and the Treasury estimated that 375,000 of these participants will have converted from trial modifications to permanent modifications by the end of 2009. The exact number of permanent modifications will be reported later this month. Phyliss Caldwell, who will lead the conversion efforts as chief of the Treasury’s Homeownership Preservation Office, said that her office must “refocus” its efforts to “ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.”


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