Treasury Pushes Bankers on Loan Modifications

During daylong meetings Tuesday, the Treasury Department pressured executives from 25 mortgage companies to promise to work harder to modify more mortgages for troubled borrowers.

The officials agreed orally on a new goal of 500,000 loan modifications by Nov. 1.

The meeting stemmed from concern that the program to modify mortgages will fall far short of the original goal of 3 to 4 million modified loans. As of this week, only 200,000 borrowers were enrolled in three-month trial loan modifications.

"Today's meeting was an opportunity to identify ways to accelerate the program and bring relief faster," Treasury Secretary Timothy Geithner said in a statement.

Bankers who attended the meeting complained that the original announcement of the program led the public to believe that modifications could be accomplished immediately.

"It was very difficult as an industry as a whole to try to live up to those expectations," said Dan Frahm, a Bank of America spokesman.

Source: The Associated Press, Alan Zibel and Daniel Wagner (07/28/2009)