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Groups seek foreclosure delay

May 15, 2007|From the Associated Press

A coalition of California consumer groups sent letters Monday urging six major mortgage lenders to suspend foreclosures on home loans for the next six months and find ways to keep borrowers at risk of default from losing their homes.

If the mortgage lenders don't act, hundreds of thousands of Californians who took on risky loans could lose their homes, according to the letters sent to the chief executives of Countrywide Financial Corp., Wells Fargo & Co., Citigroup Inc., Washington Mutual Inc., Bank of America Corp. and Merrill Lynch & Co.

More than 100 organizations, including legal aid groups, housing counseling services, economic rights advocates and other consumer groups signed off on the letters.

"We are asking the largest lenders in the state to take leadership so that families can keep their homes and California's economy won't suffer," said Kevin Stein, associate director of San Francisco-based California Reinvestment Coalition, which coordinated the campaign.

A call to the Mortgage Bankers Assn., the industry's trade group, was not immediately returned.

Foreclosures have been rising for months as the housing market slowdown has left many borrowers unable to refinance or sell their homes.

More than 80,000 homes went into foreclosure in the first quarter in California, or more than double the figure from the year-earlier quarter, according to Irvine-based RealtyTrac Inc.

Many of the borrowers who have defaulted had sub-prime loans, which in many cases led to higher monthly payments when their interest rates adjusted higher.

Dozens of sub-prime lenders have gone out of business in recent months because they lost funding and were pressed to buy back defaulted loans.

IAC/InterActiveCorp on Monday said it cut about a fifth of its LendingTree mortgage unit's workforce. About 440 jobs will be eliminated in Irvine; Charlotte, N.C.; and Jacksonville, Fla., the company said.

Stein said the mortgage industry bore some responsibility for the foreclosure problems because loose underwriting standards helped push borrowers into loans they couldn't afford.

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