Treasury defends efforts to end foreclosure crisis

A top Treasury Department official on Thursday defended the administration's efforts to reduce foreclosures amid tough criticism from both parties.

Herbert Allison, assistant Treasury secretary, said the program is seeing success even though foreclosures continue to mount.

"These efforts are having an impact on our housing markets and we are seeing signs of stabilization," he said.

But Allison acknowledged in testimony that the program of encouraging home loan modifications was slow to ramp up.

"The process of converting trial modifications to permanent has been more challenging than officials originally anticipated," Allison said. The House Committee on Oversight and Government Reform is holding a hearing Thursday on the administration's housing program.

On Wednesday, two dozen House Democrats sharply criticized the administration's efforts and said in a letter to Treasury Secretary Timothy Geithner that the foreclosure crisis has only worsened under the Obama administration.

House Republicans, including Reps. Darrell Issa (Calif.) and Jim Jordan (Ohio), also have had tough words for the administration's efforts.

Allison said the program is on track to have between 3 and 4 million trial modifications by 2012. But critics, including the special inspector general on the $700 billion bailout program, say the focus on trial modifications is misguided. The program has produced roughly 170,000 permanent modifications, 13 percent of the total number of trial offers extended.

The Treasury Department issued a series of new guidelines for the program this week aimed at clearing up confusion in the program.