By Martin Crutsinger, AP Economics Writer
WASHINGTON (AP) — With the foreclosure crisis showing no signs of relenting, the Obama administration plans to expand a program aimed at helping people remain in their homes.
The goal of the announcement, expected Monday, is to increase the rate at which troubled home loans are converted into new loans with lower monthly payments, Treasury spokeswoman Meg Reilly said during the weekend.
Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.
The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.
Under a $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.
The government support, which is provided from the $700 billion financial bailout program, is aimed at providing cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.The program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.