Money Matters - Simplified

Lenders pressured to lower house payments

New York -- The Obama administration plans to shame lenders into reducing mortgage payments for more troubled homeowners, a U.S. Treasury official said.

"Some of the firms ought to be embarrassed, and they will be," Michael Barr, treasury's assistant secretary for financial institutions, told The New York Times.

The new campaign comes amid evidence a $75 billion taxpayer-financed effort to stem foreclosures is failing, the Times reported.

Lenders recently accelerated the pace at which they are reducing mortgage payments for borrowers, but just a fraction of the reductions have been made permanent. Fewer than 2,000 of 500,000 loan modifications in progress have become permanent, federal officials said.

The government plans to publicly name stingy institutions and wait until mortgage reductions are permanent before paying cash incentives promised to mortgage companies that lower loan payments.

"They're not getting a penny from the federal government until they move forward," Barr said.

Copyright 2009 by United Press International.

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