Lenders Have Helped Borrowers

March 5th, 2008 | Tags: Foreclosure

Spokesperson from the banking industry claims that they have helped more than 1 million borrowers since last July right up to January. Critics say that considering the number of foreclosures the help numbers are far less than adequate. Hope Now an organization launched by the Bush administration quote statistics that more and more house owners facing foreclosures have been given help. Here again the critics are alleging that information has not been released about who are getting help.

From the 1 million that received assistance 73% opted for repayment plans – they got back on tracks after missing a payment or two. The balance 27% had their loans permanently modified with lower interest rates. The figures go back to July when Hope Now had not come into the picture. It did only from October 2007 when a frenzy of foreclosures hit the market.

The Chief Executive of National Community Reinvestment Coalition, John Taylor remarked that even with modified loans the borrowers are not being able to keep up. Taylor further commented that if the target is really to help struggling house owners details about the loans adjusted should readily come forth. This raises questions about the success of the plan.

These sentiments were echoed by Senator Christopher Dodd of the Senate Banking Committee and the Industry and Treasury Department. He wants a more comprehensive effort funded by the government to buy up the loans in the red. Bush has favoured a voluntary effort led by the industry. Dodd added that considering the sheer volume of the problem Hope Now did not quite size up to it.

Statistics provided by the industry group showed that assistance went up to 36% in January 2008 as compared to 30% in January 2007. The chairperson of Federal Deposit Insurance Corp, Sheila Bair said that although the figures were encouraging there are doubts if those helped now will not again become delinquents and fall into the troubled foreclosure zone again. She asked the banks to give details about the measures taken by Hope Now.

Similar requests have been made by Federal Office of Thrift Supervision, the Federal Reserve and other allied bodies. The chief executive of Financial Services Roundtable addressed reporters saying that lenders have stepped up record activities to help the foreclosure victims. Such a massive move has not been seen till now.

So far 638,000 sub-prime borrowers have been reached – that is 9% of the faulty afore mentioned loans.