Digital News Report – Although the loan modification program was designed to slow the decline in home prices and help homeowners avoid foreclosure, there has been some problems.
Some homeowners continued to face foreclosure after they applied for a modification. Others have completed their trial modification period and were turned down for a permanent modification.
State Attorney Generals are seeking to resolve the first problem by banning foreclosure proceedings while modification applications are being considered. In some cases foreclosure proceedings continued while homeowners waited for a decision.
Servicers have claimed that it was in the best interest of the note-holder to continue the proceedings while applications were under review.
The AGs also want to see more trial modifications become permanent. They are looking for uniform standards to help lenders decide which modifications should become permanent. Modifications may be reviewed by an independent panel to determine if there were any errors.
Another proposal is to bring the homeowner and note holder together before the foreclosure. Senator Sheldon Whitehouse (D-Rhode Island) is proposing a meeting between the two parties before a foreclosure is finalized.
The Limiting Investor and Homeowner Loss in Foreclosure Act (S. 222) has sponsors and is moving forward in the Senate.
By Tina Brown
Digital News Reporter