Banks must stop foreclosures during loan modifications
12/02/2010
By Credit.com Staff
During a recent Senate Banking Committee hearing, acting Comptroller of the Currency John Walsh said banks will no longer be allowed to proceed with foreclosures while they are evaluating whether consumers qualify for refinances, according to The Wall Street Journal. Walsh called the current system that allows banks to do this, "unnecessarily confusing for distressed homeowners."
However, there was some dissent with the decision, the report said. Edward DeMarco, acting director of the Federal Housing Finance Agency, said the banks' practice is necessary at times because foreclosures can take up to a year or two to complete. In addition, some borrowers don't respond to offers for help.
Many consumers have faced the threat of foreclosure in recent months because most major banks were processing so many seizure requests that they did not properly examine all the necessary paperwork. This method, known as robo-signing, led to the improper completion of many foreclosures.
