The housing sector has yet to recover from the financial crisis and it will take "several more years" to work with though all the foreclosures, according to Treasury secretary Timothy Geithner.
"It is going to take several more years, under the best of circumstances, to heal that pain," Geithner told a Senate appropriations panel Tuesday morning.
He stressed that the best cure for the housing market is to keep the economic recovery going and creating more jobs. But the Home Affordable Modification Program is another important effort to give "millions" of Americans at risk of foreclosure a chance to stay in their homes, Geithner testified.
"Servicers have done a really terrible job of helping people" get through the loan modification process, he said. "They are not doing a good enough job of helping homeowners navigate through a very complicated and difficult process. They have to do a better job."
Sen. Richard Durbin, D-Ill., complained that the banks' policies are leading to more foreclosures, more vacant properties and blight. He noted that financial institutions have to take more responsibility for this situation. "We have given them a lot of carrots; it is time to find a stick," Sen. Durbin said.
The Treasury secretary alluded to the fact the major banks are facing heavy penalties for foreclosure processing violations. Federal regulators and state attorneys general are negotiating a global settlement with the banks. "As you know we are involved in a series of efforts to try to bring more force to a more rapid resolution of those problems," the secretary said.
