New Lender Guidelines To Help Struggling Homeowners

by: Ron Haruni posted on: June 16, 2008 | about stocks: BAC / C / CFC / FITB / JPM / RF / STI / USB / WB / WM / XLF    
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Blindsided by the number of loans that have already gone bad, top mortgage lenders - according to a WSJ report - have reached a major agreement on new guidelines to improve and speed up the industry’s voluntary efforts to help struggling homeowners.

While lax lending policies have been blamed for the ongoing home-mortgage crisis across the country, the distress has been exacerbated by fundamental problems with the economy, primarily - as result of the housing meltdown.

The agreement among the firms in the Treasury Department-backed Hope Now alliance, which is scheduled to be announced Tuesday, comes as U.S. Senate lawmakers prepare to begin debate this week on a massive housing package aimed at slowing the record pace of foreclosures that continues to roil the economy. That legislation, which includes a program to refinance up to $300 billion in troubled mortgages, could be voted on by the Senate this week, sources said.

The Hope Now agreement will have lenders and servicers take a uniform approach when dealing with homeowners, including setting a specific timeline for them to respond to borrowers seeking to avoid foreclosure.

Borrowers seeking help should receive an acknowledgment of their request within five business days once received by the lender, the agreement says, and would in most cases receive a final decision on whether they will receive help with their loan within 45 days.

Lenders and servicers have also agreed to other steps, including the automatic subordination of second liens in certain circumstances, suggesting that a second lien holder should re-subordinate their loans to allow refinancing or a loan modification under certain conditions.

In addition to forbearance, repayment plans and loan modifications — including a writedown on a loan’s principle — the agreement directs lenders to accept a deed in lieu of foreclosure or a short sale instead of completing the foreclosure process.

In other words, the agreement calls on servicers to delay foreclosure proceedings that are about to begin, or have already begun, when there is a possibility that other steps could allow a homeowner to remain in their residence.

Hope Now claims its efforts have resulted in nearly 1.6 million loan workouts since July 2007. These numbers however, are met with skepticism from regulators.

This article has 5 comments! Add yours below...

Ron Haruni

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This article has 5 comments:

  •  
    muley101
    Jun 16 08:14 PM
    How can Senators Dodd and Shelby possibly survive their next election ? These two morons have been asleep at the wheel for years. They are to balme as much as any of the incopetent CFOs that have been fired from the finace industry. Someone should write an article on their complicity with the mortgage crisis.
  •  
    rm
    Jun 17 11:09 AM
    My Website
    [and would in most cases receive a final decision on whether they will receive help with their loan within 45 days.]

    They're already far, far, very, very far short of this standard.

    This new plan appears to be a combination of "nothing new" and promises that can't be kept.

    They say that they'll "consider" things... such as principal reduction... when the recent Boston Fed paper clearly states that such a consideration makes no sense.

    I love how these announcements really say nothing at all.
  •  
    WAKEUP
    Jun 17 01:20 PM
    A classic example of a drowning person, grasping at straws.
  •  
    User 127919
    Jun 17 11:24 PM
    guys it is time for to start buying these financial because somebody is buying these stk. just do dollar cost averaging. think TEMPLETON....
  •  
    H2O
    Jun 18 12:41 PM
    My Website
    Open Market Oil – No Regs – Now Open Drilling for All

    No that is a great solution – give the free-traders – open Markets to manipulate the oil prices – and now – The repubs wants to give them – low cost American oil – to sell back to Americans at the high cost.

    War of LIES – to say oil will be cheap with there – IRAQ war of LIES – and now more LIES oil will be cheap if we steal American oil and gas.

    Until the OIL ENRON LIKE free-traders are regulated – They’ll just keep stealing and destroying America – Just like Countrywide and all the others.

    Time to post everywhere - - The Enron samples of how they steal from America – Let Americans – Know what they do and how they do it.

    MARKET TRADER LAUGHING AT AMERICANS – ONCE AGAIN.

    TIME TO TAKE BACK AMERICA – PROSICUTE THE THIEFS!!!!

    POST THE VIDS – OF THEM LAUGHING AT AMERICANS.
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