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Treasury's Steel says mortgage securitizers too slow
Tuesday, February 5, 2008
WASHINGTON (Thomson Financial) - The companies involved in repackaging and selling mortgages into securities or investing in them are lagging in their response to the coming wave of potential foreclosures, a senior Treasury official warned a group of their executives today.
"Progress is being made, but your industry must move even faster," Under Secretary Robert Steel told the American Securitization Forum (ASF) today. "Each additional day it takes to fully implement (these workouts) we are missing homeowners who could have been helped."
Treasury and the ASF developed a set of fast-track tools for finding homeowners in danger of foreclosure when their mortgages reset to higher rates and helping them in to more affordable mortgages or other financing options.
Steel implied that not enough companies are using the plan, and "we expect your industry to hold to its commitment to help more homeowners, faster, by using the ASF framework, and we look forward to seeing the measurements of your success."
Steel's prod to faster action was similar to one made by Federal Reserve Governor Randall Kroszner to the same group on Monday.
While mortgage securitization fostered a greater flow of capital into housing and made home ownership possible for many more people, Steel also said there was a downside to the innovation.
"We must be honest and admit some malfeasance," he declared. "It is clear that in some instances market participants acted inappropriately." Market participants and regulators both have to commit to a reassessment of some practices that had become business as usual in the mortgage industry, Steel said, and that has begun.
