Lenders Object on the Proposed Bill That Will Delay Foreclosures

by Peter Vernon on Foreclosures, Stop Foreclosures

Governor Arnold Schwarzenegger was venerated by the lot when he was on with the Assembly Democrats in the pursuit in cutting down foreclosure by going against mortgage related bills in the Legislative regular session. But this did not actually alarm the legislators, not because the problem is not urgent but because the problem is not that complicated.

In a hearing held by the Assembly Banking and Finance Committee last week, Ted Lieu (D-Torrance) bill on additional 120-day chance before a house is totally foreclosed and resold was not acted and therefore was revised. Like Schwarzenegger’s 90-day delay suggestion, ABX4 4 suggested lenders and loan services to implement their own plans in avoiding preventable foreclosures through provisional mortgage modifications. But lenders objected.

Creditors are trying to help the problematic borrowers, but the inventory of houses in foreclosure is still large. The reason why mortgage modifications are resisted by lenders is because they own many of these troubled loans. On the other hand, investors sell their problematic loans to Wall Street.

Trade groups or the mediators of buyers and sellers of the securities help loan servicing companies in determining the acceptable modifications. But the members must follow the federal bank regulators, state attorney general, and Fannie Mae and Freddie Mac, who adapted a modern approach.

Though not all borrowers get the chance to be rescued from foreclosure due to the economic status, the debtor must be allowed to be helped when there is an interest-rate cut or modifications.

Legislators must set their attention in ensuring that no foreclosure will occur if the lender does not check the possibility of modifying a loan, and to gauge if the modern modification techniques are effective.

As for distressed homeowners, working with your lender is still encouraged and you should make sure that all possible options are explored in order to stop foreclosure.