Foreclosures Haunt Lenders And Banks

February 20th, 2008 | Tags: Foreclosure

Foreclosures know no difference. Its fall out is affecting all – lenders and borrowers as well as government and society. The lender group is anxious to have the borrowers contact them. The latest from them and the Bush administration is Project Lifeline. It targets those house owners who are more than 90 days defaulting in their mortgage payments – that means those at grave risk of being foreclosed upon. Experts opine that this is the typical approach taken by lenders when they find borrowers eager to reach a amicable settlement. There is nothing unique about it. Project Lifeline is the extension of another step taken previously known as Hope Now Alliance launched by the Bush administration previously. It did not show expected results. Project Lifeline differs from it that whereas Hope Now Alliance focused on sub prime mortgage defaults, this new one covers all types of residential mortgages and not just sub-prime. Six mortgage giants – Countrywide, Wells Fargo, Citimortgage, Chase Home Finance, Washington Mutual and Bank of America have chalked out this strategy together with the federal government. They will contact borrowers who have crossed the 90 days deadline telling them that foreclosure proceedings will be delayed by 30 days if the borrower responds within 10 days of receipt of the letter stating a keenness to avoid foreclosure and keep the house. They must also agree to financial counseling if lenders thinks so and provide all financial information required. Then both sides will come to an understanding in all probabilities. Amongst the workout options the borrower will pay extra per month so as to become current, or modify the loan in which the terms would be changed. In extreme cases the debt might even be forgiven if the value of the house is less than the loan. With none of the clauses being novel it is not generating much enthusiasm. The loan servicers complain that connecting with delinquent borrowers has become a serious problem. More than half the borrowers who are in trouble do not contact the lenders despite efforts from the latter. Lisa Breier a real estate lawyer says that this time the tone of the letters will in all probability be mild and persuasive and this might tempt the borrowers to come out of their shells. She further comments that the 30 days grace period is not sufficient to tackle the foreclosure problem of such grave proportions.