Feds push mortgage companies to modify more loans amid complaints

WASHINGTON -- Government officials summoned 25 top mortgage lenders to a meeting on Tuesday where they set a new goal of reaching 500,000 mortgage modifications by November.

The meeting was called to discuss delays and other problems hampering the Obama administration's housing recovery effort.

According to Treasury officials, during the meeting:

•Lenders agreed to significantly increase the rate at which they are performing loan modifications, in which home mortgages are changed so that monthly payments are more affordable.

•Lenders voiced concerns about the system. A suggestion: an online application system.

•Government officials said they will track details such as the average borrower wait time for inquiries.

"The meetings were very positive, very worthwhile," says Scott Talbott of the Financial Services Roundtable. "Everybody is committed to the same goal."

Problems in the mortgage-modification program have included lengthy delays in getting responses to homeowners seeking mortgage modifications.

Progress has been slow. About 1.16 million properties — or more than 9,400 homes a day — have received a filing of foreclosure notice from March through June, RealtyTrac says.

Under the program, eligible homeowners can get a modified mortgage from their bank on a trial basis for the first three months. If they make payments on time, the modification goes into full effect.

More than 200,000 trial loan modifications are underway, Treasury said Tuesday. An additional 170,000 offers for modifications have been made.

In August, the government will begin publishing monthly reports about servicers and how many loans they modify.

The meeting was led by Michael Barr, Treasury assistant secretary for financial institutions; Herb Allison, Treasury assistant secretary for financial stability; FHA Commissioner David Stevens; and William Apgar, HUD senior adviser to the secretary.

Some economists say the discussion is a sign that government officials are getting nervous about the plan's lack of progress.