Feds press for permanent loan mods

The Obama administration is increasing pressure on mortgage lenders to convert temporary loan modifications for high-risk borrowers to permanent ones by the end of the year. The U.S. Department of the Treasury and Department of Housing and Urban Development will require lenders to submit a schedule for how they will decide whether or not a loan would be permanently modified and to report any obstacles borrowers face in moving to the permanent phase. These rules are intended to discourage lenders from cherry-picking those borrowers who are at lowest risk and therefore need assistance the least. Since Oct. 1, servicers have been required to disclose the reason for any denied modifications. Any servicer that fails to meet its obligations under its agreement would bear fines or other sanctions. To encourage banks to speed up conversions, the administration will keep track of individual bank performance through metrics that will be reported publicly. Lagging institutions incl...