Treasury's New Broom Phyllis Caldwell Raps America's Banks on the Knuckles – ForeclosureConnections

Treasury's New Broom Phyllis Caldwell Raps America's Banks on the Knuckles ForeclosureConnections

The Treasury's Chief of Home Ownership Preservation is settling in

and making her presence known

But, is that enough to re-align the banks?

When Treasury's Chief of Homeownership Preservation Phyllis Caldwell signed on 6 months ago HAMP was already in trouble. That's because a huge majority of the 650,000 troubled homeowners who had signed for it still hadn't the faintest idea of what their lot was going to be and, for many, their clocks were running out of spring.

Caldwell's first step was to try to lever banks into accepting the principle of permanent loan modification it there was a tougher entry point into the situation, then I haven't come across it yet.

"I think the first month was a very steep learning curve [on the program]," the lady of understatements mentioned modestly.

Before becoming Leader of Washington Women's' Foundation (which channels grants to low-income and matriarchal families) Phyllis Caldwell spent her career in the financial services industry, touching bases with CitiGroup, First Chicago and Bank of America in the process. I should imagine that (office politics aside) managing a staff of thirty trying to reverse some risky banking decisions can't be an easy transition, especially since she took over from a string of three interim leaders when she came of board.

Caldwell's main brief, within an overall remit to help underwater borrowers refinance, is to administer the $75 million sweetener that's designed to convince doubting Thomas lenders to play ball.

"I think she inherited a mess, a challenge I wouldn't envy," said President of the National Community Reinvestment Coalition John Taylor. "But I do know that because of her background, she knows what the solutions need to be."

Caldwell's new project has been fiercely criticized by some lawmakers and industry analysts for being slow in doing nothing. Even with Caldwell at the helm, the administration has still only helped around 200,000 borrowers through the process a small piece of the action given the 4 million borrowers the Treasury originally targeted.

Last week, Treasury Secretary Timothy Geithner announced at a Senate Subcommittee Hearing that lenders that did not comply with the program were in danger of losing their taxpayer-funded program payments already granted.

"I certainly had to have a number of difficult conversations with servicers who may not understand why they need to do everything they need to do for this program," Caldwell has said. "If servicers are going to get taxpayer dollars for modifying these loans, they have to modify them the right way."

On a more positive note, short sales (where homes are sold below mortgage value and lenders forgive the difference) have begun to increase in number, although many have benefited owners who wanted to move for career purposes anyway. This seems to suggest that the latest HAMP initiative has failed to address the original target, which was to keep underwater families in their homes.

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