Federal Reserve officials have stated time and again over the past several years that we believe that lenders and servicers should work actively with troubled borrowers to pursue mortgage modifications whenever possible. The consequences of not conducting modifications are simply too high–for borrowers, for lenders, for the local communities, and for the overall economy.
Especially among developed nations, we cannot afford a growing disparity in the quality of risk practices at our important institutions, nor a disparity in the quality of supervision of those institutions. As bankers like to say, the worst competitor is an uninformed competitor -- and that goes doubly for the competitor’s supervisor.