| Credit & Debt | Personal Finance | Economic Crisis | Housing Market | Employment Trends | Expert Insight |
Subscribe  Print 
|
||
NCLC: No incentives for servicers to stop foreclosureThe report, which was produced by the National Consumer Law Center (NCLC), noted that mortgage service providers may find it more cost effective to encourage people to go into foreclosure rather than start them on a home loan modification program to find debt help. Diane E. Thompson, an attorney with the NCLC who authored the report, said the country is facing a foreclosure crisis as homeowners deal with mortgages that are unaffordable. "Foreclosures are a costly ordeal for the homeowner, the lender, and the community," Thompson said. "Yet they continue to outstrip loan modifications because servicers have no incentive to help borrowers stay in their homes." The findings in the report indicate that servicers are more likely to try and offer homeowners repayment plans or forbearance rather than home modification. The reason is that modification means a certain loss for the servicer, while alternatives offer the potential for profit. Thompson said that the organizations that could help the situation, such as the federal government and credit rating agencies, have not succeeded in providing servicers with incentives for offering loan modification. In order to fix the situation and stop foreclosures, the NCLC report recommended a number of steps. Those include further regulation of loan originations, mandating loan modifications before foreclosures, and offering principal reduction through the government's Home Affordable Modification Program (HAMP). The HAMP program was introduced by the government in order to help people stop foreclosures on their homes. Recently, the government announced it had surpassed the 500,000 mark for home loan modifications, a number officials in the Obama administration wanted to achieve by November 1 of this year. According to RealtyTrac more than 900,000 properties in the country saw foreclosure filings during the third quarter of this year.
|
||
