Administration Launches Outreach Campaign in Support of Embattled Housing Program

WASHINGTON, June 26, 2009— -- The Obama administration today will launch a national campaign to promote its program to help struggling homeowners keep their homes. But already the program has been criticized by lawmakers, including a handful of key Democrats, for not doing enough.

In a letter to Treasury Secretary Tim Geithner on Wednesday, 20 Democratic senators, including Majority Leader Harry Reid and Senate Banking Committee Chairman Chris Dodd, bluntly stated, "The situation remains grave."

Recent data confirms their warning.

A report released this week by the Federal Housing Finance Agency found that even with expanded foreclosure prevention efforts during the first three months of this year – including various moratoria placed on foreclosures – more people still lost their home than got a modified loan.

"Completed loan modifications increased by 57 percent over the prior quarter to 37,300 and more than doubled compared to the first quarter of 2008," the report said, but added, "Completed foreclosure sales and third-party sales during the quarter increased by 17 percent over the prior quarter to 41,800."

One in every 398 households received a foreclosure filing in May, the third straight month the number of filings exceeded 300,000, according to a RealtyTrac report. The problems remain most severe in the so-called "sand-states" like Nevada and California. And with the country's unemployment rate currently at a 25-year high, it may be some time before the housing sector begins to grow again.

"In order to stabilize the economy we need to stabilize the housing market," Sen. Jack Reed, D-RI, said in a statement. "Companies that have agreed to participate in the administration's foreclosure prevention programs must be held accountable, especially when they are simultaneously receiving taxpayer dollars."

In some cases, it's a problem of access. The National Foreclosure Mitigation Counseling Program said homeowners have to wait an average of 45-60 days for responses to requests for help.

"Homeowners who are looking to get help before it's too late should not have to wait two months to receive an answer to their questions," Reed said. "The administration must keep pushing to ensure that servicers' public pronouncements translate into relief for homeowners."

Critics of Program Speak Out

The senators also voiced concern about the number of option adjustable rate mortgages (ARMs) due to re-set in the next four years. As many as one million mortgages may fall into this category.

The administration's housing help plans were unveiled in March, so there has not been much time for its efforts to take hold. But for many people, time is of the essence. The administration's three-part program aims to keep mortgage rates low by boosting confidence in Fannie Mae and Freddie Mac, help around four to five million homeowners get new access to refinancing, and reduce monthly mortgage payments for three to four million at-risk homeowners.

Administration officials, along with city leaders and local housing partners, held a press conference in Miami to kick off the promotional campaign, which will include nine other housing markets that have also been hit hard by foreclosures, including Los Angeles, Las Vegas, Boston, Phoenix and Sacramento. The goal, the administration says, is to empower local advocates to help homeowners get the assistance offered by the housing program.

"More than 50 percent of all foreclosures occur without servicers and borrowers ever connecting," Geithner said in a statement today. "With this targeted campaign, we can reach in to the communities most in need, bolster awareness of this program and help responsible homeowners take the first step toward getting relief – all steps that in turn help to stabilize the housing market and get our economy on the path to recovery."

For millions of homeowners, that relief cannot come soon enough.

ABC News' Charlie Herman contributed to this report.