In the Mortgage Market, The Government Is The Problem

From reporting today by PBS Marketplace (here):

Bruce Marks is the CEO of NACA (the Neighborhood Assistance Corporation of America).

BRUCE MARKS: Every person who's here (at a loan modification convention in LA) has already tried and failed to work with their lender. So it's really incumbent upon the government to require them to do it. I used to be a regulator, I worked at the Federal Reserve Bank. The fact of the matter is, as a regulator, they can force these lenders to do it across the board.

VIGELAND: Why does it take something like this for a homeowner to be able to modify a loan? What's the difference here?

MARKS: There are two differences. We have legally binding agreements with all the major lenders and the investors covering over 90 percent of mortgages in this country where they have to do it. Secondly, there's nothing like that face-to-face interaction. Personal interaction is what gets the results, because you see families, you see the devastation firsthand, and that makes that banker that much more committed to helping the homeowner.

VIGELAND: But if that's the case, then isn't it pretty close to impossible for banks to do this for the millions of people who need a loan modification?

MARKS: Well, actually they can. But you know, you have to have the government pushing to do that. The biggest problem we have are not with Bank of America mortgages or Chase or Wells or Citi, it's with government-owned mortgages: FHA, Fannie Mae, Freddie Mac. So the mortgages that the government controls, those should be the ones that we can modify the easiest. They should stop the foreclosures and they should say that these bankers can never foreclose on somebody unless every effort was made to modify that mortgage and that was documented.