Pact Between Ohio State And Mortgage Servicers

April 9th, 2008 | Tags: Mortgage

The initial deadlock between Ohio Governor Ted Strickland and nine mortgage servicers of Ohio has been sorted out. This was announced by Strickland and Kimberly Zurz, the director of Ohio Department of Commerce. The servicers have agreed to push through a programme of larges scale loan modification of the ARM sub-prime mortgages. The understanding is non-binding and will remain in effect till 30^th June 2009.

The servicers have agreed to try to contact those borrowers who are at risk at an early date, modify the loans within limits and create incentives for the working personnel of the firms to go ahead with the scheme in real earnest. The progress will have to be reported to the state’s commerce department.

Six months ago Strickland had initiated talks about a comprehensive voluntary agreement targeting 20 mortgage servicers in Ohio state. Not one of the servicers agreed to sign although they supported a national effort, backed by the mortgage industry, Hope New Alliance formed to tackle the foreclosure problem. The Mortgage Bankers Association of Ohio offered an alternative plan that was also voluntary in nature. Strickland rejected it on the grounds of it being non-performing.

The state and the servicers agreed on six points which are somewhat similar to the original scheme. The servicers who came forward are Carrington Mortgage Services. Citi, Homecomings Financial Network. HSBC, Option One Mortgage, Saxon Mortgage Services, Select Portfolio Servicing and Litton Loan Servicing.

This pact is connected with the Save the Dream initiative of the state that was triggered off in the previous month. It aims to help house owners threatened with foreclosures to establish links with counselors and also avail of other forms of assistance. A hotline has been started.

The state has added more teeth to its foreclosure prevention plans by arranging for free legal aid for the harassed foreclosure victims. Together with the Chief Justice of Ohio Supreme Court, Thomas J. Moyer, Governor Strickland made this announcement. It is part of Save the Dream initiative of the state. The income of the help seeker has to be not more than $54,000 annually for a family of four. Letters have been sent by the state to over 34,000 registered advocates to come forward. Amongst those that are agreeable many have already been trained in foreclosure matters while the others will undergo it. Fund availability will not be a constraint.