Report: Mortgage Servicers Unable To Keep Up With Loan Workout Workload; Fail To Adopt Systematic Approach

The Washington Post reports:

• Seven out of 10 troubled mortgage borrowers remain without a plan to work out their loans despite increased industry efforts to help them, according to a new report from a coalition of state attorneys general and banking regulators. The coalition collected data from 13 of the largest subprime lenders from October through January and found that they are overwhelmed by their workload and unable to keep pace with the growing number of borrowers who are falling behind on payments.

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• The good news is that more lenders appear to be embracing long-term solutions by rewriting the loan terms instead of simply rescheduling payments, the report said. Five of the 13 lenders are modifying the loans, usually by lowering interest rates and less often by forgiving part of the principal. But while lenders appear more motivated to help, they continue to work on a case-by-case basis instead of adopting a more systematic approach. As result, the process is time-consuming and often fails to help borrowers before they fall into foreclosure.

For the story, see Most Troubled Mortgage Borrowers Without Plan, Report Finds.

See also, Reuters: US states find little change in mortgage servicing. MortgageServicingIssuesAlpha