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This Washington Post headline really captures the flavor of the Administration's relationship with the banks: "White House Prods Banks." The story goes on to explain that HUD Secretary Shaun Donovan and Treasury Secretary Tim Geithner have sent a letter to the heads of the largest mortgage servicers, telling them to get busy modifying loans under the Making Home Affordable , which you may remember is the anti-foreclosure plan that is not doing great out the gate.
Geithner and Donovan asked the servicers to hire more staff, expand call centers and improve the training of employees handling calls from borrowers. The banks were also told to designate a senior liaison for the program and to prepare for a July 28 meeting with senior Treasury and HUD officials to discuss how to fully implement the effort.It's probably wishful thinking, but the July 28 meeting could represent something of an accountability moment for the banks and the administration -- a chance for the government officials to do more than prod. This story, among others, discusses the dilemma of when to determine a program isn't working as hoped and start looking for new solutions. If, at that meeting, it doesn't look like the administration will meet their goal of doing 20,000 modifications a week in August, there could be some changes on the table. Maybe I'm a broken record, but I bet Treasury officials are really wishing they had worked harder to get cramdown passed.
-- Tim Fernholz
