Let Courts Modify Bad Loans Says Consumer Bankruptcy Group; Quality, Sustainability Of Current Modifications Depends On The Individual Servicer
- With fresh evidence that voluntary mortgage modifications aren't working, a national lawyers' group is urging the government to let the courts fix bad loans. "Court supervision of loan modification is needed, and unlike so many of the responses to the foreclosure crisis so far, there will be no cost to the taxpayer," Henry Sommer of Philadelphia, president of the National Association of Consumer Bankruptcy Attorneys, said Thursday.
- A study in November of mortgage-servicer reports to investors by Valparaiso University School of Law Professor Alan White showed that of 3.5 million subprime and slightly less-risky Alt-A mortgages examined, 10 percent were in foreclosure and 10 percent more were delinquent.
- Of the 21,000 of these delinquent loans modified, two-thirds saw an increase in principal, called "negative prepayment," which added an average of $11,000 to loans of $210,000, White said. [...] "There is a tremendous variation in the number and quality of modifications, and the chance of getting one depends on the servicer," White said, adding that the monthly payments on
45 percent the 21,000 loans modified actually increased.
For more, see Lawyers: Let courts fix bad loans.
See also:
- Center for Responsible Lending: Repeat Failures on Home Loans Reveal Faulty Modifications,
- BusinessWeek: A Mortgage Regulator Speaks Out (John Dugan, the Comptroller of the Currency, suspects that lenders aren't doing enough to reduce the mortgage burden on homeowners). loan modification
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