The Obama administration is putting pressure on the financial industry to speed up loan modification. Senate Majority Whip Dick Durbin (D-Ill.) has said he will consider proposing new legislation to impel faster loan modification if the industry does not reach  500,000 loan modifications by November, a goal which the administration set last week for the financial industry.

One possible proposal would be to allow bankruptcy judges to modify primary home mortgages themselves. This was in a bill that failed to pass the Senate earlier this year, but it might find more support if the modification rate remains sluggish.

Another proposal would allow for reductions of principal as part of the modification, in an effort to ensure that the homeowner would not redefault later.

Durbin is also considering legislation that would require mandatory arbitration between borrowers and lenders prior to foreclosure. Another element in the legislation would allow homeowners to stay in their homes by paying fair market rent during the process.

The public will need to monitor the success of these efforts in the news.

This entry was posted on Tuesday, August 11th, 2009 at 11:40 pm and is filed under Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.