Is this real or just more "hot air"? The Treasury Department claims that is ready to send in the police if mortgage servicers don't shape up and help stop more foreclosures. Well not exactly the POLICE, more like the financial police. The Treasury Department announced that they might send in financial "SWAT" teams to police the performance of mortgage servicers who are collectively failing to stop the foreclosure crisis:
The Obama administration will send "SWAT" teams to keep an eye on the six largest mortgage servicers, who collectively handle about 85 percent of outstanding U.S. mortgages. Participating servicers also will be required to report to the Treasury twice daily on their progress to convert trial modifications to permanent fixes. The failure to boost permanent solutions significantly will trigger consequences, Barr said.
But before you scream "hip hip hooray," let's look at some of the facts:
- The Treasury Department seems to be making a habit of staging these types of ridiculous announcements and nothing significantly happens afterwards. The numbers of foreclosures are still increasing and the mortgage servicers are doing absolutely nothing about it.
- Remember when the Treasury Department announced that they were going to create the "foreclosure hall of shame" for mortgage servicers who were lagging behind in preventing foreclosures? Has anything changed? No
- Remember when the Treasury Department threatened mortgage servicers with the withholding of incentive funds if they didn't modify mortgages permanently and stop more foreclosures? Well the truth is they don't get those incentive funds until after the modifications become permanent anyway-so not a very effective method.
The mortgage industry currently does not have enough incentives to force it to help stop this foreclosure crisis. If we are serious about stopping foreclosures, we need to make toxic mortgage modification MANDATORY.