Washington, DC (PRWEB) October 21, 2010
John Taylor, president & CEO of the National Community Reinvestment Coalition, issued this statement today in response to the Administration’s probe of mortgage servicers:

“It was heartening to hear that the Obama Administration is investigating regardless of whether servicers are performing all they can to support homeowners keep away from foreclosures, but their probe must incorporate the abusive lending practices that led to the economic chaos that shattered our economy. The Administration ought to move swiftly on the query of whether or not banks are doing what they need to do and must do below housing laws to help borrowers because stemming foreclosures is essential to ending the economic downturn. Foreclosures are the bane of our economic recovery, and we fail to see how a temporary national freeze will hurt the economy more than the foreclosures do. No one wants to freeze foreclosures on abandoned houses. And a foreclosure freeze provides us all the opportunity to counsel homeowners, operate with lenders and servicers to repair the servicing pipeline, and hold accountable home owners in their properties.

“As well a lot of of these failing loans relate to the origination of those loans becoming steeped in fraud, abuse and unsustainable lending. Regulatory and enforcement officials, several now exorcized over the recent inaccuracies in paperwork and documentation, must delve a little deeper into the much more devious and widespread malfeasance that developed these unsustainable loans. The Administration’s new probe need to look not only at how banks are assisting home owners but also how banks created the loans in the first place.

“We have been saying because 2007, these loans should be modified or refinanced in a way that places the homeowner in the kind of loan they should have received in the very first place. Wall Street, servicers and lenders require to take duty for adjusting these loans to a reasonable level based on the borrower’s potential to spend. This has been the intent under many foreclosure prevention applications. And it was a regular practice in the financial services sector prior to the sub-prime lending market hijacked the mortgage company. This will contribute to homeowners remaining in their properties and minimizing, substantially, the quantity of foreclosures. A single issue a federal probe ought to examine is the extent to which servicers are in fact making sufficient efforts to make sustainable modifications to loans.

“Only a national freeze on foreclosures would give officials the the ability to do this in a timely manner. A freeze on foreclosures does not imply that abandoned or vacant properties can not be foreclosed on or sold, of course that need to occur. But for those property owners that are still attempting to pay their mortgage, but have fallen behind by means of no fault of their own, an additional strategy is required.

“A freeze would let servicers to put their shops in order to stop fraud and abuse. It’s clear that their sloppy practices are pushing a lot of home owners to foreclosure who could otherwise steer clear of it. With an addition 11 million foreclosures coming down the pike (according to Amherst Securities), it really is crucial that we fix this process. A six-to-eight month freeze would also permit these working with home owners, banks and servicers, to address the backlog of home owners needing counseling, mediation or legal services. With out some kind of oversight and verification, enabling servicers to make their own determinations about the integrity of their servicing processes is a bad concept, given what we now know. Who’s to say that their robo-signing, mass-production process will not continue and will push far more individuals into foreclosure, hurting our economy and the millions of households attempting to operate their way out of this abyss?

“The government saw the need to rescue the extremely economic institutions that placed our economy in jeopardy, but has failed to bring the very same sense of urgency to help these quite households who have been impacted by the abusive, fraudulent and unsustainable lending practices by Wall Street and mortgage lenders. This is like telling a malaria victim that they must fend for themselves simply because they shouldn’t have been exposed to these spreading the malaria. America’s true moral hazard will be to blame millions of families that trusted the unregulated financial solutions sector with their life savings and dreams, only to have been taken to the cleaners.”

# # #





Discover Much more Loan Modification Services Press Releases