Treasury Loan Modification Records

​In a first-time historic move, the U.S. Treasury plans to release information that could have a huge effect on loan modification policies that might help prevent home foreclosures in the future. Loan modifications are considered as any changes made to the basic terms of a home loan including interest rate changes, principal reductions or a decrease in the frequency of loan payments.

The Treasury has been slow to fulfill promises to release demographic information on the people who have received loan modifications despite numerous Freedom of Information Act (FOIA) requests by housing and consumer advocacy groups, including New America Media, who says they have been waiting for the Treasury to the release data detailing why borrowers were denied loan modifications for over a year. The group includes the National Consumer Law Center organization, who filed an FOIA request at the end of 2009, and now says the Treasury made promises and sent a few relevant items, but added the agency still hasn’t provided the requested information a year later.

A Treasury spokesperson said requests for the race and ethnicity data of those who did receive loan modifications under the Home Affordable Modification Program (HAMP) said the information would be released at the end of October. The release date was then changed to November, the same time the New America Media group submitted yet another FOIA request for the data. The Treasury has now promised to release the data by the end of January 2011. Treasury spokespeople also said any delays up to now have been due to efforts to ensure homeowner privacy.

The San Francisco-based California Reinvestment Coalition, a housing advocate group, said the delay prevents access to critical information concerning loan modifications, the primary means of preventing foreclosures, and stressed that there is very little public information on who is getting the loan modifications and the terms of the deals, except that information that is contained in bank records.

In the past, demographic information on lending has revealed racial disparities and the data requested from HAMP could be used in the same way to ensure fair housing laws are being upheld. National Consumer Law Center attorney Geoffry Walsh, said his organization was denied a request for specific information on a loan calculator that lenders use to determine who will qualify for a loan modification. The calculator juggles the borrower’s income, property value, late payments, credit score and modification amount in order to determine if an investor would be better off with a loan modification or a foreclosure. Many homeowners nationwide have complained about a lack of transparency on the part of banks when they tried to modify their home loans with lenders.

The National Consumer Law Center’s most recent request was denied on the grounds that it was proprietary information. Center officials disagreed and appealed the decision, but the appeal was also denied. Now, with the announcement that the data will finally be released, the changes will offer homeowners more transparency on the entire loan modification process. The rules set forth by the Home Affordable Modification Program state that anytime a loan modification is shown to be the best option, the loan service must perform the loan modification without threat of foreclosure. The Treasury also said it will make its loan modification calculator formulas available to the public later this spring.

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