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Saturday, March 05, 2011

Update on Possible Mortgage Servicer Settlement

by Calculated Risk on 3/05/2011 11:07:00 PM

Earlier: Here is the Summary for last week ending March 4th

• From Nelson Schwartz and David Streitfeld at the NY Times: Mortgage Modification Overhaul Sought by States

State attorneys general have presented the nation’s five biggest banks with a list of demands that could drastically alter the foreclosure process ...

Under the blueprint, banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

Any borrower who successfully made three payments in a trial modification would be given a permanent modification. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.
It was absurd that servicers would deny a modification when the borrower was making all the payments in a trial program - that just seemed like the servicer was taking advantage of the borrower. This is definitely a needed change.

• From Nick Timiraos and Ruth Simon at the WSJ: Mortgage Practices Overhaul Proposed
Current government modification programs are largely voluntary, and there are few rules governing servicers' practices. But on Thursday, the nation's largest banks, including Wells Fargo & Co., Bank of America Corp., and Citigroup Inc., received a detailed 27-page proposal from state attorneys general and federal agencies to force a shakeup in banks' mortgage-servicing policies.

One mortgage industry executive familiar with the document described it as "almost like a wish list."
Obviously this is just the beginning ...