CRL Criticizes Government's Loan Modification Programs
Yes the banks are over staffed and they have anywhere from 800-1000 loss mitigation cases at one time.Do they really care ? With the loan modification being done to day , They squeeze the homeowner for all they got ! literally scaring the crap out of the homeowner to get them to pay any amount of money stating if they do not make a payment today they are foreclosing on the house.Banks are using scare tactics to full throttle to get anything from homeowners! www.ForeclosureRecoveryTeam.com FREE CONSULTATION
The Center for Responsible Lending (CRL) says the U.S. Treasury Department's existing plan to help distressed homeowners is ineffective and realistically will only have the impact of preventing 118,200 foreclosures, which is only 3-percent of the outstanding subprime loans that are in the marketplace heading towards rate resets.
CRL said, “This analysis shows the Treasury plan, plus existing lender modifications, barely make a dent in the growing foreclosure crisis and will allow subprime damage to continue spreading through the entire economy.”
In a critique of the plan, CRL claims data supplied by the Mortgage Bankers Association points to a disturbing trend in which voluntary loan modifications will be significantly outnumbered by potential foreclosures.
Below is a verbatim list of CRL's criticisms of the Treasury Department's plans:
(Source: CRL)
On all loans, industry data show that for every loan modification made by a lender, seven times as many foreclosures are initiated. For the subprime adjustable-rate mortgages (ARMs) that are at the root of the current crisis, foreclosures outnumber modifications 13-to-1.
Lenders are giving themselves credit for loan "repayment plans," but these should not count. Repayment plans make homeowners' monthly mortgage payments higher. And they allow lenders to designate a distressed loan as being current without actually changing any of the terms that made a mortgage unaffordable in the first place.
It is questionable whether even the true loan modifications will be sustainable because lenders have no obligation to report outcomes. In fact, previously Countrywide acknowledged that most of its touted modifications actually "involved deferring overdue interest or adding the past due amount to a loan," not reducing interest rates or principal balances on unaffordable subprime ARMs.
