Frank Warns Firms On Need for Mods
House Financial Services Committee chairman Barney Frank, D-Mass., is warning mortgage servicers that they could face very restrictive regulation next year if they don't cooperate in modifying loans for distressed borrowers.
The chairman said he is picking up antidotal evidence that servicers, not the investors, are the reason so few mortgages are being restructured.
"I want to put the servicers on notice. If we see a widespread refusal on the part of servicers to cooperate, they can expect much tougher regulation in the future," Rep. Frank said.
The Hope Now alliance reported that servicers are providing loan modifications to nearly 50% of subprime borrowers seeking a workout in January and February.
The latest Hope Now update shows servicers modified 81,885 subprime mortgages in the first two months of the year, compared to 90,420 subprime borrowers who ended up in repayment plans. Servicers have doubled the 2007 rate of loan modifications, according to Hope Now executive director Faith Schwartz. "The industry is dedicated to minimizing foreclosures," she added.
Servicers modified 45,320 subprime mortgages in January and 36,565 in February.
Hope Now also reported that 60,000 or 43% of 2/28 and 3/27 subprime adjustable-rate mortgages that were scheduled to reset in January and February had been paid off. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/