PHILADELPHIA — Worried that the latest federal efforts to ease foreclosures will fall short, some bankers and community advocates want Washington to offer even more ways to keep borrowers in their homes.
The Obama administration
"We have about 14% to 15% of our customers who qualify under HAMP, so clearly we'd like to see the parameters expanded so that more customers can qualify," A. Marie Day, senior vice president and regional servicing director for Wells Fargo & Co.'s home mortgage division, told American Banker last week.
Day was one of several bank executives, economists and others in the mortgage and credit industries gathered in Philadelphia at a conference to discuss ongoing problems facing distressed borrowers and the impact of housing problems on consumers' credit scores. The conference was hosted by the Federal Reserve Bank of Philadelphia.
"We should be making sure that [HAMP] allows for maximum flexibility so the maximum number of people can be helped," Day said. She declined to give specifics on what an improved program might look like.
HAMP and HARP, both launched in 2009 by President Barack Obama's administration, are designed to help homeowners stay in their homes, either by modifying the conditions of a home loan to avoid foreclosure or by refinancing a mortgage if the homeowner is underwater.
Day praised President Obama's Oct. 24 announcement expanding HARP, calling the decision a "very good move" and suggesting "maybe they'll do the same with HAMP."
Last month, lawmakers on the House Financial Services Committee
Rep. Luis V. Gutierrez, a Democrat from Illinois, pushed Geithner at the Oct. 6 hearing to say how much money has been spent under the mortgage modification program. The congressman estimated the administration has only spent $2 billion or $3 billion on HAMP so far, a fraction of the $50 billion in authorized funding, which Geithner said was due to the fact that fewer people were eligible under the program than expected.
Annette Rizzo, a judge in Philadelphia's Court of Common Pleas, praises the government's efforts under HAMP, but argues that the program still needs to do more.
"HAMP is a foundational base from which discussions begin. But it's not the end-all," Rizzo told American Banker at the conference. The judge, who helped organize the conference, is also involved in a local homeowner-support program she helped develop. The program requires mortgage lenders, borrowers, pro bono attorneys and housing counselors meet and seek out a resolution before a home goes to auction.
HAMP would benefit from more flexible borrower eligibility requirements and stronger enforcement of rules requiring servicers to provide written responses to homeowners who are denied loan mods, Rizzo suggested.
Better use of funding would also help, she said.
"It's very heartfelt to think dollars of that size went back to Washington that really could have been used in all these jurisdictions to help people turn their situation around," she said.
Conference participants spent the bulk of the day discussing how credit scores are developed and used, and the impact of missed payments, bankruptcies or foreclosures on consumer credit scores. A low credit score can take years for consumers to pull back up, and can hinder access to credit and increase interest rates on car loans and other big-ticket items.
"Of course your credit score goes down after foreclosure, but what we'd begun to hear is how long it takes to recover," says Dede Myers, vice president of the Community Development Studies and Education at the Philadelphia Fed.
