'Huge Disconnect': Banks Say They Work With Borrowers, But May Not
One way to resolve the current mortgage meltdown is for lenders to work with borrowers and modify their home loans to make them affordable. This can be in the lender’s own interest, because foreclosing, especially in the current housing market, is expensive and likely to result in a lowball resale price.
But although lenders say they are ready to work with borrowers, the reality is they often don’t, according to housing advocates. One reason why: banks no longer own many of the mortgages they made, and the investor pools that purchased the loans can be difficult to track down and persuade to modify them, reports Reuters.
Among housing advocates who say lenders need to try harder to work with borrowers is Kevin Stein of the California Reinvestment Coalition. He cites a “huge disconnect” between bank claims that they do so and the perception among those who attempt to modify loans. The State Foreclosure Prevention Working Group said earlier this month that 70 percent of borrowers who are trying to fend off foreclosure aren’t involved in loan modification efforts, according to the news agency.
“Our experience varies greatly from lender to lender and even between individual employees,” says Barb Van Kerkhove of the Empire Justice Center in Rochester, N.Y. “It often depends on who answers the phone.”
