Doubts About Lenders Sincerity To Help Foreclosure Victims

July 9th, 2008

In California doubts are being cast about the sincerity of lenders in helping the foreclosure victims. However the office of Governor Schwarzenegger released reports about the lenders rewriting the loans of the troubled borrowers. A governmental tally shows that loan modifications by which loans were either frozen or interest rates decreased numbered 8,686 in May 2008. This was less than the April number of 9,448. Compared to January however the numbers in May showed an increase.

Lenders said that all total the loan deals worked out showed increases. There were 21,359 workouts in May as compared to 20,567 in April. In January the number of workouts was 16,000. These deals covered a wide range of alternatives including short sales. By it the lender permits the sale of a house at a price less than the loan amount and both sides benefit by avoiding foreclosures. In loan modification the borrower gets time to catch up with the previous arrangement or the rate of interest is lowered.

The authorities agree that the initial pace of help was slow in November last year. But the results have encouraged speeding up of the process. Mark Leyes of the Department of Corporation is enthusiastic about these “dramatic increases” and “good news.”

The state government launched an advertisement campaign for foreclosure victims. There were billboards on buses and in newspapers flashing the message “90 Days of Hope”. The borrowers were advised strongly to call the lenders for help. The idea is that if this $1.2 million programmed helped at least one out of 20 families calling it was worth it. Amanda Fulkerson, spokesperson of State and Consumer Services Agency was quite upbeat about it.

The state Senate mulled over a bill by voting of 32/2 that would require lenders to contact the borrowers in person or via telephone to find out a solution before starting off foreclosures.

Another bill (1137) sees to the interest of tenants. They will be given 60 days time to make arrangements for shifting after the unit is foreclosed.

Those who become owners of foreclosed houses will be expected to see to its maintenance. If not they were be penalized to the tune of $1,000 per day. As soon as the governor signs the bill the changes will come into effect.

All these are against an alarming background of increasing foreclosures with California continuing to rank among the top offenders.