Advertisement
YOU ARE HERE: LAT HomeCollections

Lenders vow faster response

Firms say mortgage aid applicants will receive word within 45 days.

June 17, 2008|From the Associated Press

WASHINGTON — Mortgage companies, facing criticism that they aren't doing enough to stem the housing crisis, are pledging to let troubled borrowers know whether they're approved for help within 45 days of receiving a homeowner's application.

The promise is expected to be announced today by the Hope Now alliance, a Bush administration-backed industry group, as part of a new set of guidelines for mortgage companies participating in the effort. The agreement is designed to clarify the mortgage assistance process for borrowers and the industry alike, but it is not legally binding.

It also tries to alleviate a major stumbling block: the reluctance of companies that hold second mortgages, such as home equity loans, to agree to such modifications. Such requests should be approved, the agreement says, unless the holder of the second mortgage would be put in a worse financial position.

Consumer groups, however, say Hope Now's efforts will never match the nation's growth in foreclosures and are pushing for a new $300-billion program that would enable the government to back new loans for struggling homeowners.

"There isn't a serious level of modification going on because the program is voluntary," said John Taylor, president of the National Community Reinvestment Coalition, a consumer group in Washington, who described the newest announcement as "baby steps."

Housing counselors have said the loan-modification process is bureaucratic and difficult to understand, and say it is tough for consumers to get someone on the phone with the authority to help.

The industry has also favored repayment plans that aim to help borrowers get back on track after missing a few payments rather than lower interest rates or forgive part of the principle balance.

Consumer advocates have pressed Congress to let bankruptcy judges rewrite the terms of mortgages for strapped borrowers, but that proposal faces intense opposition from the Bush administration and Republican lawmakers.

Statistics released last month by Hope Now showed that nearly 183,000 borrowers received some form of loan workout in April, the highest monthly number since the effort started last summer.

But the group was also criticized last week by a federal bank regulator, who questioned the accuracy of trade groups' mortgage assistance data. The regulator, Comptroller of the Currency John Dugan, called them "responses to surveys that produced aggregate, unverified results from individual firms."

Foreclosure filings last month were up nearly 50% compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48% from 176,137 in the same month last year and up 7% from April, foreclosure listing service RealtyTrac Inc. said Friday.

Members of Hope Now include Bank of America Corp., Washington Mutual Inc. and Wells Fargo & Co.

Advertisement
Los Angeles Times Articles
|
|
|