While more and more banks are stepping up to the plate and willingly modifying loans for homeowners who have no equity left, a lot of banks are still rejecting pleas from homeowners who are in trouble but not yet late in their mortgages. One trend to look for in 2009 is for banks to be more and more willing to modify loans even before the situation gets dire. In a recent AP story, new Treasury Secretary Tim Geitner is quoted as saying that banks that receive government help will be required to modify loans to help struggling homeowners. Of course the definition of “struggling” remains fuzzy so we will have to wait and see if the banks will help people who have not fallen behind or not. Here are some quotes from that article:
Treasury Secretary Timothy Geithner on Saturday told lawmakers that financial institutions that receive government assistance will have to make loan modifications and meet other new standards, according to Democratic sources.
Geithner, during a briefing with House of Representatives’ Democrats, was asked about a New York Times report that the Obama administration would not require banks to increase their lending as part of revamped government effort to restore stability to the financial industry.
According to the sources, who asked not to be identified, Geithner said: “We are not doing what they wrote … Institutions that get assistance will have to participate in loan modifications and meet other standards that we set.”
“Public assistance is a privilege, not a right,” the sources said Geithner told lawmakers.