Faced with the rising tide of foreclosures that the present system has failed to head off, a new senate proposal would obligate lenders to work directly with at-risk borrowers and include penalties for lender non-compliance. Yet even though national recovery hinges on real estate stability, the plan lacks full support from Freddie Mac executives who argue that the home modification affordability program is sufficient. For more on this, see the following article from Property Wire.
Property lenders should meet face to face with distressed owners to discuss foreclosure options as the current system is inadequate, under a plan drawn up by a group of Senators in the US.
They say they are fed up with the mortgage modification efforts of the nation’s largest servicers and new legislation is needed to make lenders modify certain loans and limit their foreclosure practices.
Their proposals would require lenders and servicers to offer modifications to homeowners if the net present value of modification is greater than that of foreclosure.
It would also limit foreclosure fees, create a national foreclosure tracking database and encourage face to face meetings to resolve difficulties.
There would be strict penalties for those firms that did not comply with the rules.
‘As foreclosure rates continue to climb a lasting economic recovery becomes harder to reach. It’s long past time for the Senate to step up to keep families in their homes.
Until we stabilize the real estate market we simply won’t get a handle on the broader economic crisis.
Voluntary efforts to keep families in their homes have failed,’ said Durbin.
The proposed act also outlines a state-sponsored mediation program and a system for distributing grant money to borrowers who are struggling to make payments, regardless of the mortgage product they are participating in.
‘More and more households are finding that even with a fixed-rate mortgage that they could afford before the recession, they are just one pink slip away from losing their biggest investment,’ added Durbin.
Freddie Mac said it believes lenders are doing enough.
IT said it has contracted Titanium Solutions, a third-party servicer, to go to the homes of delinquent borrowers to get the missing information and documentation necessary to start three-month long trial repayments under the Home Affordable Modification Program (HAMP).
‘By meeting with our borrowers, one on one, we can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods,’ said Ingrid Beckles, Freddie Mac senior vice president, default asset management.
However, a group representing the pockets of Americans hardest hit by the property crisis is doubtful these initiatives will do much good in the long run.
The National Consumer Law Center said that there is no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of affordable and sustainable loan modifications.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.