waronyou
29-12-2008, 10:57 AM
With U.S. home prices in free fall and mortgage delinquencies mounting, pressure to modify troubled loans is ratcheting up.
But lawyers who represent candidates for modifications say the programs are hobbled by the complexity of securitization pools that hold the loans, as well as by uncertainty about who actually owns the notes underlying the mortgages.
Problems often emerge because these notes - which are written promises to repay the full amount of a mortgage - were not recorded properly when they were bundled by Wall Street into pools or were subsequently transferred to other holders.
How can a loan be modified, these lawyers ask, if the lender cannot prove that it actually owns the note? More and more judges are asking the same thing about lenders who are trying to foreclose on borrowers.
And here is another hurdle: Most loan servicers - the people responsible for handling all the paperwork surrounding monthly mortgage payments - are not set up to handle all of the details involved in a modification.
Loan servicing operations are intended to receive borrowers’ payments. Producing loan histories and verifying that payments have been received or junk fees have not been applied is considerably more labor-intensive. This cuts into profits.
“These servicers are not staffed up and they don’t have a chance in the world to do the stuff they are supposed to do,” said April Charney, a consumer lawyer at Jacksonville Legal Aid in Florida. Many servicers stonewall troubled borrowers who ask for histories of their loan payments and fees, she said.
http://mintdollar.com/dubious-accounting-undermines-aid-for-us-homeowners/
But lawyers who represent candidates for modifications say the programs are hobbled by the complexity of securitization pools that hold the loans, as well as by uncertainty about who actually owns the notes underlying the mortgages.
Problems often emerge because these notes - which are written promises to repay the full amount of a mortgage - were not recorded properly when they were bundled by Wall Street into pools or were subsequently transferred to other holders.
How can a loan be modified, these lawyers ask, if the lender cannot prove that it actually owns the note? More and more judges are asking the same thing about lenders who are trying to foreclose on borrowers.
And here is another hurdle: Most loan servicers - the people responsible for handling all the paperwork surrounding monthly mortgage payments - are not set up to handle all of the details involved in a modification.
Loan servicing operations are intended to receive borrowers’ payments. Producing loan histories and verifying that payments have been received or junk fees have not been applied is considerably more labor-intensive. This cuts into profits.
“These servicers are not staffed up and they don’t have a chance in the world to do the stuff they are supposed to do,” said April Charney, a consumer lawyer at Jacksonville Legal Aid in Florida. Many servicers stonewall troubled borrowers who ask for histories of their loan payments and fees, she said.
http://mintdollar.com/dubious-accounting-undermines-aid-for-us-homeowners/