The Obama administration wants mortgage companies to increase loan modifications as part of its plan to prevent foreclosures.
The Treasury Department says it will appoint officials to monitor how the largest mortgage companies are complying with the government's program to reduce foreclosures. The Wall Street Journal reports the Treasury Department is also going to require mortgages companies to develop and report on their plans to increase the number of borrowers whose loans have been modified.
According to The New York Times, these announcements show the Obama administration's $75 billion effort to stem foreclosures is struggling. So far, about 500,000 borrowers have received temporary loan modifications, but only a small percentage of those modifications have become permanent.
The Treasury Department says banks are not doing a good enough job making sure the program's working. But banks say many borrowers aren't providing the necessary documents, including a hardship affidavit, to prove they should get a permanent modification.
The NYT reports many economists believe the plan is suited to solve last year's problem of costly mortgages, and not for the current problem of soaring joblessness.