How To Help Homeowners?
November 14, 2008
What did the Federal Reserve Bank researchers recommend?
- Create realistic programs that simultaneously help borrowers afford and keep their homes and ensure that lenders are better off than they would be from foreclosures.
- Pay loan servicing companies an incentive to complete “appropriate” loan modifications that keep borrowers in their homes.
- Streamline the loan workout process to reduce costs.
- Spur additional loan workouts by giving servicers immunity from potential litigation by investors who may perceive the changes as being too generous to borrowers.
- Delay foreclosures for homeowners who are close to reaching a loan workout deal.
- Increase pressure from Congress, the administration and regulators to establish rules that promote loan workouts, subordinate second mortgages and other liens and raise the “quality of [loan] servicing.”
- Measure each loan servicer’s success at preventing default through detailed analysis of cure rates. Cure rates track loans that move from delinquency to current as well as loans that move from delinquency to foreclosure.
- Helping Homeowners A Losing Proposition
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