Foreclosure No Longer Most Common Outcome for Struggling Borrowers

August 2, 2010 No Comments »


Here’s some “good news.”

A recent survey of 53 mortgage counselors (with 14,000+ caseloads in the past two months) conducted by the California Reinvestment Coalition revealed that foreclosure is no longer reported as the most common outcome for struggling borrowers, the first time since the survey began in 2007.

And now the bad news; the most common outcome has shifted to being stuck in a trial loan modification, with the majority saying they last more than six months before ultimately being denied a permanent mod.

Additionally, 60 percent of counselors reported having clients suffer foreclosure while in the middle of negotiations with their loan servicers.

It gets worse – 100 percent of counselors reported that servicers lost documents and requested them to be sent again.

At the same time, 78 percent of counselors said it was very common for servicers to deny loan modifications because they didn’t receive all necessary documentation.

“It’s time for HAMP to be overhauled, starting with the government getting serious about enforcement,” said CRC Associate Director Kevin Stein, the survey’s author, in a release.

“Beyond that, we must admit that this limited program is not enough. We need to get beyond HAMP and develop other solutions to the crisis facing our neighborhoods.”

In an effort to help prevent unnecessary foreclosures in California, Senate President pro Tem Darrell Steinberg and Senator Mark Leno recently introduced SB 1275, which provides certain rights and solutions to consumers working their way through the loan modification process.

The Treasury department also recently created an appeals process under HAMP, but counselors have reported numerous servicer violations and little meaningful oversight.

(photo: letideascompete)

Leave A Response