Lenders Agreeing To Commong Guidelines To Mitigage Foreclosures

Posted in Foreclosures, June 20th, 2008 |

Most of the jumbo lenders have agreed to stipulate certain common guidelines to mitigate problems of foreclosure. The aim will be to highlight options and alternatives before proceeding with the same.

The plan however is voluntary without legal bindings. It was released by the Hope Now alliance – a federally baked group of lenders and mortgage servicers. The framework of action – the first of its kind – outlines what the lenders should do and what borrowers should expect regarding some key points of the foreclosure process. It takes into account the fact that many lenders do not have sufficient employees to handle the surge of complaints pouring in. Some lenders seem to be evasive about loan changes that would put a halt to foreclosures.

One of key headaches of foreclosures will be addressed. The frequent complaint is that the hot lines of lenders are always busy and little help is forthcoming from the employees. Either one has to hold on to the line for a long time otherwise the line is passed on to sometimes as five different extensions. Sarah Fouqart of Greenpath Debt Solutions who gets referrals from Hope Now has similar complaints. But with the new guidelines coming into force the lenders will either positively or negatively respond within 45 days of dispatching papers. Previously it took four to six weeks.

The line of approach will be individual specific. Some may be counseled to cut down on spending habits and go under the scan of an affordability-analysis that will survey all the pending debts. There is no one silver bullet for the myriad housing challenges. But by following set rules of action impact will be maximum and perceptible. This is the opinion of Robert K. Steel Treasury Department’s Under Secretary for domestic finance.

Other options are outlined – temporary halt of payments, reductions of interest rates for some time, as well as granting of federally backed loans to make up 12 months of delinquent installments.

Some were critical about difficult lenders being persuaded to follow guidelines. Attorney Mario Dosso is skeptical about new protection or rights about foreclosure victims. It is generally believed that no miracles will take place. Rather, while the talk goes on so too will foreclosures. This means mounting legal expenses and penalties.

Hope Now however is optimistic that these moves are signs about the sincerity of the mortgage industry to tackle positively the growing foreclosure crisis. Hope Now took off with the blessings of White House last year.