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| Study: Home Loan Adjustments Rarely Made |
A new study says loan servicers rarely renegotiate terms with Illinois homeowners facing foreclosure.
The group Housing Action Illinois examined 38 loan servicers in Illinois, and found that 27 of them were willing to renegotiate a loan with a homeowner facing foreclosure less than 25 percent of the time.
This is surprising, says policy director Bob Palmer, because the servicers would benefit. "Economically, in terms of the bottom line … all the data show that if a house goes into foreclosure, both the servicer and the lender are going to be worse off than if they can allow the [homeowner] to avoid foreclosure and keep current," he says.
Palmer suggests servicers modify the interest rate or the length of the mortgage, or restructure some of the principal so it is paid off only when the home is sold.
Active servicers with the highest volume of loans in Illinois found least likely to agree to workout plans:
* America's Servicing Co. (subsidiary of Wells Fargo)
* First Franklin Loan Services/Home Loan Services
* Bank of America
* Saxon Mortgage
* American Home Mortgage Servicing
* Aurora Loan Services
Refinancing into a new, affordable loan was offered only 3 percent of the time, according to the study. Palmer says a workout can be complex, because the loan may be divided, packaged and sold to a panoply of "lenders," but the money saved by the lenders is huge, compared to value lost when a property goes into foreclosure.
Palmer acknowledges that if a borrower sustains a hardship such as job loss, it is hard to him to keep his home with no income, but if the problem is the terms of the loan itself, renegotiating the terms can be a benefit to the lender, the servicer and the homeowner.
(Illinois Radio Network) |
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| 12 25 08 by Newsroom |
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