The robo-signing mess is "extremely damaging" to the loan modification effort, a Treasury Department official said, because it confirms homeowners' feelings that they can't trust their servicers.
"I am very concerned it will discourage borrowers even more from responding to all the overtures that servicers are making to try to keep them in their homes," said Laurie Maggiano, policy director at the Treasury Department's Homeownership Preservation Office.
Speaking at an REO property preservation conference in Washington, Maggiano noted that servicers were finally getting serious about the Home Affordable Modification Program and offering struggling homeowners with "responsible and sustainable loss mitigation options" when robo-signing problems became front page news.
There are many reasons the response rate to servicers' outreach efforts has always been low, she said. "But the huge one is they won’t pick up the phone because they don’t trust their servicers." Now with the robo-signing controversy, "it is "going to get worse," Maggiano added.
