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The Obama administration announced Monday plans to pressure lenders to help more people who can't afford their mortgage payments.


 The Treasury Department says it may fine mortgage companies that aren't doing enough to make permanent loan modifications under the government's $75 billion 


 The goal is to increase the rate at which troubled home loans
are converted into new loans with lower monthly payments. At the
end of October, more than 650,000 borrowers, or 20 percent of those
eligible, had signed up for trials lasting up to five months.


      But getting homeowners to complete the process has been tough.


      As of early September, only about 1,700 homeowners had finished
all the paperwork and received a new permanent loan. Treasury
officials projected Monday that 375,000 homeowners would hit the
deadline to convert to permanent modifications - or fall out of the
program - by year-end.


      In an effort to shame the companies into doing a better job,
Treasury will publish a list in December of the mortgage companies,
also known as servicers, that are lagging.


      "We now must refocus our efforts on the conversion phase to
ensure that borrowers and servicers know what their
responsibilities are in converting trial modifications to permanent
ones," Phyllis Caldwell, who recently was named to lead the
Treasury Department's homeownership preservation office, said in a
statement.

      Under the administration's $75 billion program, companies that
agree to lower payments for troubled borrowers receive several
thousand dollars in incentive payments for modified loans, but
those payments aren't made until the modifications is permanent.

      Some executives, however, said they have had trouble getting
borrowers to return necessary documents to complete the
modifications, which allow homeowners to have their mortgage
interest rate reduced to as low as 2 percent for five years.


      "The documents were confusing. Borrowers did not understand the
process wasn't closed until the documents came in," Sanjiv Das,
chief executive of Citigroup's mortgage unit, said earlier this
month. "Even when the documents came in, they were not always
complete."

      Mortgage finance company Freddie Mac has hired an outside
company, Titanium Solutions Inc., to send real estate agents around
the country to knock on borrowers' doors and help them complete the
paperwork.

      "It can be a little bit intimidating," said Patrick Carey,
Titanium's chief executive. "They don't, in many cases, understand
exactly what is being asked of them."

      The program has come under heavy criticism for failing to do
enough to attack a tidal wave of foreclosures. Analysts say the
foreclosure crisis is likely to persist well into next year as
rising unemployment pushes more people out of their homes.

      About 14 percent of homeowners with mortgages were either behind
on payments or in foreclosure at the end of September, a record
level for the ninth straight quarter, according to the Mortgage
Bankers Association.

      The Congressional Oversight Panel, a committee that monitors
spending under Treasury's bailout program, concluded last month
that foreclosures are now threatening families who took out
conventional, fixed-rate mortgages and put down payments of 10 to
20 percent on homes that would have been within their means in a
normal market.

      Treasury's program, known as the Home Affordable Modification
Program, "is targeted at the housing crisis as it existed six
months ago, rather than as it exists right now," the report said.

      Homeowners who may be eligible for assistance can call
888-995-HOPE, or visit the Web site www.makinghomeaffordable.gov to
learn more.

Gallery

The Treasury Department says it may fine mortgage companies that aren't doing enough to make permanent loan modifications under the government's $75 billion mortgage relief program.

Obama administration increases pressure on lenders

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