July 28, 2009
Treasury Secretary Timothy Geithner
United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Secretary Geithner:
As consumer, community and faith‐based organizations working to stop preventable foreclosures,
we are deeply concerned by the slow pace at which many servicers are extending loan
modifications under the Administration’s Home Affordable Modification Program (HAMP).
The continued high rate of foreclosure is not only devastating to families who want to remain in
their homes, but is also destructive to local communities, and to the overall economy. Some
servicers have moved forward quickly to modify significant numbers of mortgage loans under the
HAMP program, but many servicers appear to be dragging their heels or proceeding with
foreclosures while HAMP modifications are pending, thus undermining efforts to revive the housing
That is why we thank you for calling together servicers today to urge them to do more to prevent
In addition to putting public pressure on servicers – many of whom received billions of dollars in
taxpayer support – our organizations would like to recommend several improvements to HAMP
that we believe will help the program meet the foreclosure prevention goals set out by the
1. Servicers should comply with existing HAMP guidelines, including suspending all
foreclosure proceedings until it can be determined whether a homeowner is eligible for a
HAMP loan modification, applying HAMP guidelines to all portfolios being serviced and
offering modifications that conform with HAMP guidelines.
2. Servicers must be pressed to speed up the pace of modifications, by adding trained
staff and working more closely with non‐profit HUD approved loan counselors; Treasury
should consider creating a simpler web‐based point of entry for counselors and
homeowners to upload information and documents.
3. The Treasury should create greater transparency and fairness in the program, by
disclosing the Net Present Value (NPV) models that servicers are using to calculate
eligibility for modifications, requiring that homeowners who do not get a modification be
told the specific reason for their denial, giving homeowners the right to appeal to a forum
outside the servicer, and making all loan‐level reporting data available to the public in both
report and raw form, except for personal identifying information.
4. The Administration’s foreclosure prevention initiative should be adjusted to account
for rising unemployment and falling property values, including creating stronger
incentives for servicers to offer homeowners principal reductions. Adjustments for
unemployment should include using unemployment insurance payments as income, and
allowing households to be reinstated as HAMP participants if they are more than 90 days
late as a result of loss of income ( and slow servicer response), but re‐establish timely
5. In addition to offering carrots to servicers to modify mortgage loans, the Federal
Government should use sticks that it has available to put pressure on servicers to
fully comply, including barring corporations from receiving TARP funds, or from
participating in other programs, such as the Public Private Investment Program (PPIP), if
they own mortgage servicing units that refuse to meet all of the HAMP requirements.
Servicers must be required to modify loans before foreclosure whenever modification
would benefit investors as well as borrowers. If servicers do not significantly step up
voluntary loan modifications, the Administration and Congress should revisit bankruptcy
reform legislation to give homeowners the ability to request judicial loan modification.
Your continued efforts to hold servicers accountable, along with these program improvements will
help millions of families remain in their homes, while stabilizing hard‐hit communities and putting
the housing market on a path to recovery.
We look forward to discussing these ideas with you in more detail, and to working with you to put
in place a new regulatory structure that will prevent this crisis from every occurring in the future.
Americans for Financial Reform
Consumer Federation of America
Housing Counseling Services, Inc.
National Association of Consumer Advocates
National Association of Consumer Bankruptcy Attorneys
National Consumer Law Center
National Consumers League
National Fair Housing Alliance
National People’s Action
National Policy and Advocacy Council on Homelessness
PICO National Network
Please contact Gordon Whitman, PICO at firstname.lastname@example.org for more information
July 28, 2009