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Mortgage Executives Meet With Lawmakers

Top executives wit Citigroup, Bank of America, Wells Fargo and JPMorgan Chase met with the House Financial Services committee on Tuesday. They are skeptical about helping troubled borrowers by forgiving a portion of their debt.

Such programs “could raise issues of fairness,” said Sanjiv Das, Citigroup’s top mortgage executive. David Lowman, chief executive of Chase’s mortgage business, told lawmakers that large-scale mortgage principal reduction “could be harmful to consumers, investors and future mortgage market conditions.”

Chase estimates that reducing home loan balances so that no homeowners would owe more than the value of their homes would cost up to $900 billion, with $150 billion of that borne by the government.

The four mortgage companies represented at the hearing are the largest in the country and have come under fire for not doing enough to help borrowers as part of the Obama administration’s $75 billion mortgage relief program, which has failed to make a big dent in the problem.

Only 170,000 homeowners have completed loan modifications out of 1.1 million who began the program over the past year. Last month, the Treasury Department expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.

The Obama administration’s new plan, however, is expected to be modest in its impact. Moody’s Analytics forecasts that the new programs will help about 350,000 homeowners avoid foreclosure this year. But 1.9 million homeowners are still expected to lose their homes.

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