Lenders Asked To Be More Proactive Towards Helping Foreclosure Victims

December 3rd, 2007 | Tags: Foreclosure Victims

So far San Francisco has escaped the centre of the storm but leaders have huddled together with gloomy predictions. Major lenders have been asked to bring about radical changes in their business to help borrowers stave off foreclosures. Mayor Newsom of San Francisco has blamed predatory lending in no uncertain terms for this crisis. So far the foreclosure number here is only 2% of that in the Bay Area but any moment the storm may strike. There is nothing to be complacent about.

Newsom and other officials called a news conference in the City Hall last Thursday asking nine giant financial houses to sign an agreement targeting the foreclosure debacle and its remedial measures. The main objective is to see that people are not thrown out of their houses. The big giants involved in the talks were Bank of America, Wells Fargo, Citigroup and Washington Mutual.

The directions were that they were not to advance loans without genuine verification of loans. Borrowers were to be contacted well ahead (at least six month) before the interest rises and fund counseling bodies for foreclosure woes. The amount was to be in proportion to the profit earned so far from the sub-prime loans. They were also asked to modify loans.

California Mortgage Bankers Association did not think that the plans were realistic and reasonable. They however admitted that many lenders had already started implementing similar programmes.

Why did San Francisco so far escape the intensity of foreclosures? Most probably it was because here there had not been a frenzy of real estate activity. This had helped to maintain the housing market. Consequently house owners facing foreclosure could sell off their houses, save equity and repay debts and dues. Newsom wants immediate action because according to figures rolling a new set of loans is about to reset in the first quarter of 2008. This spells trouble.

Many groups advocating reforms while appreciating political initiatives wants the banks to change fundamentally their lending methods. They admit it will be difficult to monitor the steps of modification. It can only be hoped that the institutions will comply with the suggestions. There is awareness that the appeals are rather toothless right now. Simultaneous action must be taken to use legal knowledge and fund resources to gear up so as to be prepared for the oncoming rush of foreclosures.

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