Elizabeth Price from the Dow Jones Newswires recently wrote up this summary of recent comments by the US Treasury Secretary:
WASHINGTON -(Dow Jones)- U.S. Treasury Secretary Henry Paulson Wednesday urged mortgage companies to develop new ways and loan products to identify and help borrowers at risk for default on their home loans.
“I am calling on industry participants to review their existing practices and adopt specific criteria that will quickly identify borrowers who can keep their homes and follow up with a refinancing, a loan modification or other flexibility,” Paulson said in a statement released after he met with a group of mortgage lenders participating in Hope Now. Hope Now is a partnership between housing counselors and Wall Street firms aimed at publicizing relief for overstretched borrowers.
U.S. Secretary for Housing and Urban Development, Alphonso Jackson, called on Congress to pass legislation overhauling the Federal Housing Administration.
“It’s been exactly two months since President George W. Bush urged Congress to pass bipartisan legislation to modernize the FHA and 18 months since the administration first proposed a plan,” Jackson said.
The House of Representatives has approved an FHA reform bill but the Senate has not.
Companies participating in Hope Now, including Countrywide Financial Corp. ( CFC), Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC), said they would send letters to borrowers late on their mortgage payments notifying them of counseling beginning Nov. 19.
Paulson said that after making contact with struggling borrowers, mortgage companies can assess whether people are candidates for loan modification. Some people, current on payments but at risk of default after adjustable-rate mortgages reset, might be fast-tracked to refinancing.
Paulson repeated his view that weakness in the housing market is the most significant threat to U.S. economic growth. However, Paulson said the announcement earlier Wednesday that U.S. gross domestic product growth accelerated to 3.9% in the third quarter “reinforces my belief that we have a healthy diversified economy that will continue to grow.”