January 19, 2011 / 8:35 PM / 9 years ago

US Treasury official praises mortgage servicers

* Treasury official praises mortgage servicers

* FDIC chief calls for claims commission fund

* Protesters interrupt mortgage bankers meeting

* FHA chief says mortgage industry has “trust deficit”

By Corbett B. Daly

WASHINGTON, Jan 19 (Reuters) - An Obama administration housing official on Wednesday defended mortgage servicing companies, just one day after Treasury Secretary Timothy Geithner said the industry needs an overhaul.

Cindy Gertz, director of operations at the Treasury Department’s Homeownership Preservation Office, said mortgage servicers—firms which collect loan payments—have hired tens of thousands of extra staff to work with a crush of struggling borrowers who are trying to renegotiate the terms of their mortgages.

“I think tremendous progress has been made,” Gertz told a group of bankers at a conference organized by the Mortgage Bankers Association. Gertz, a former executive at mortgage finance giant Freddie Mac FMCC.OB, did acknowledge that the process is not complete.

Her comments stand in stark contrast to sharp criticism by other Obama administration officials.

David Stevens, the Federal Housing Administration Commissioner, told the conference the industry has a “trust deficit” that threatens the future of the housing market.

On Tuesday, the Obama administration called for a revamp of the way companies that service home loans are paid, saying the current system offers little incentive to rewrite mortgages for distressed borrowers. Geithner and Housing and Urban Development Secretary Shaun Donovan said the compensation system is “broken and should be fixed.”

Also speaking at the conference on Wednesday, the head of the Federal Deposit Insurance Corp. called on the industry to fund a new commission to compensate homeowners who may have wrongly been kicked out of their homes.

FDIC Chairman Sheila Bair said a claims commission could be modeled on those created to compensate victims of the BP oil spill and the Sept. 11, 2001, attacks. [ID:nN19223904]

The biggest U.S. mortgage servicers, including Bank of America (BAC.N), Wells Fargo (WFC.N) and JPMorgan Chase & Co (JPM.N), have been accused of using improper procedures in some foreclosures, such as using “robo-signers” to sign hundreds of documents without review in a single day and advancing foreclosures without proof they held the mortgages.

The companies, whose reputations have suffered under the allegations, are facing repurchase demands from investors in mortgage-backed securities and multiple probes from bank regulators and all 50 state attorneys general.


The conference on Wednesday drew a raucous group of more than 100 union-backed protesters who interrupted a panel, demanding “Where are the jobs?”

The protesters said they were targeting Debra Still, the chief executive at Pulte Mortgage LLC, a unit of homebuilder PulteGroup Inc. (PHM.N), and a vice chair of the association. They said Pulte received $900 million in stimulus money from the federal government but had not used to it increase lending and create jobs.

Pulte spokesman Eric Younan denounced the protest, which lasted about 15 minutes.

“PulteGroup does not directly employ the majority of the workers at its job sites, which means that the protest today at the Mortgage Bankers Association conference was misdirected and an unfortunate incident,” Younan said. (Additional reporting by Dave Clarke in Washington and Helen Chernikoff in New York; Editing by Leslie Adler)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below