The Wall Street Journal reported on April 28, 2011, that the Foreclosure Investigation has lead regulators to give the banks a new deadline. They have until mid-June to develop a plan to reorganize their foreclosure operations and until August to implement them.
U.S. regulators have outlined various requirements designed to force lenders to overhaul their foreclosure practices. The federal Home Affordable Modification Program or HAMP, has been largely ineffective because of the frustrations of dealing with banks even though voluntarily participating in the program. Invariably, the Foreclosure Action then follows and distressed homeowners lose their homes.
Regulators outlined the following requirements:
- A Single Point of Contact – Distressed homeowners must be given a single point of contact for their mortgage issues (of course this is not unlike present laws which have been ignored).
- Deadlines for Determining Qualification for Loan Modifications – This addresses the waiting game which leads to being told your documents are too out of date and you must start you Loan Modification Application over again.
- Staffing Levels – Banks have insufficient personnel to handle Loan Modifications and Foreclosure Suits. This results in denied Loan Modification applications and negligent supervision of third-party service providers such as foreclosure attorneys and law firms that handle foreclosure actions for them.
The requirements come after a three month review leading some of the biggest banks to suspend foreclosures. Our current foreclosure mess is in large part due to what the regulators found – robo-signers executing affidavits attesting to mortgage balances owed when they had no knowledge, notes lost and unable to be found, and homeowners being foreclosed upon by banks that no longer held their mortgage.
Meanwhile, regulators will also determine fines to levy against the offenders. Also, the various state Attorney Generals’ investigation continues.