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Preventable foreclosures... and why loan servicers do not want to avoid them...

Many loan servicers are not acting in the best interest of defaulting home owners which could be helped with a loan modification... instead of modifing these loans they rather foreclose on them... read the full story here... but of course there are as always situations where a shortsale or foreclosure cannot be avoided no matter what... however the preventable ones should (must) be prevented...

And here are in a nutshell the steps that Congress should (must) be mandating to all lenders and servicers, especially the ones that took bailout monies.

A recent NCLC report outlines the following action steps to avoid preventable foreclosures:

  • Avoid irresponsible lending through regulation of loan origination
  • Mandate loan modifications before a foreclosure
  • Fund quality mediation programs
  • Provide for principal reductions on existing loans in the Administration's Home Affordable Modification Program (HAMP) and through bankruptcy reform
  • Increase automated and standardized loan modifications for borrowers in default and provide a safety net for borrowers for whom a standardized modification is not affordable or who later default, through no fault of their own, on a loan modification
  • Ease accounting rules for modifications to facilitate standardized review, encourage long-term modifications, and enhance servicer recovery of the expenses incurred in performing a modification
  • Require more transparency and uniformity in how servicers report loan modifications to investors
  • Limit fees charged borrowers in default to reasonable and necessary ones

    ABOUT THE NCLC

The National Consumer Law Center is a non-profit organization that seeks marketplace justice on behalf of low-income and vulnerable Americans. NCLC works with, and offers training to, thousands of legal-service, government and private attorneys, as well as community groups and organizations representing low-income families. Their legal manuals and consumer guides are standards of the field. Learn more and find a link to the new report on our Web site: http://www.consumerlaw.org.

Posted Tuesday Oct 27