Foreclosure Prevention? Lenders Unresponsive to Loan Modification Requests
As the number of foreclosures in the US increases, so do the complaints about lenders’ unwillingness to modify existing mortgages. Instead of working to reduce the number of homeowners facing this terrible problem, lenders and loan servicers are trapping clients with dozens of forms, not returning their phone calls, and only rarely offering any relief.
According to USA Today, homeowners typically have to wait 45 to 60 days for any response to inquiries seeking loan modifications and some are still waiting five months after filing the initial paperwork. “‘Some lenders may not be turning (homeowners) down right away because it might be politically easier to push them off and delay,’ says Joel Naroff at Naroff Economic Advisors.”
Approximately 190,000 mortgages have been modified since the Obama administration began its $75 billion foreclosure prevention plan in March. In the same period, foreclosure proceedings have either begun or advanced on more than 1 million homes, with about 200,000 homes actually being foreclosed upon and repossessed.
The sluggishness of lenders will have an effect on all Americans. As New York Times reporter Peter Goodman explains, “If the [mortgage relief] effort fails, foreclosures will continue to surge and home prices will probably keep falling, sowing fresh losses in the financial system and threatening to crimp credit anew for businesses and households.”
Lenders played the leading role in creating this problem; now it’s time for them to prove that they can be a part of the solution.