California AG Wants Answers on POA Loan Mods

Concerned about a coming wave of foreclosures on payment option ARMs, California Attorney General Edmund wants some of the state's largest servicers — including Bank of America and Wells Fargo — to detail their plans on how they will help homeowners facing dramatic monthly payment increases on these controversial loans. According to figures compiled by National Mortgage News and the Quarterly Data Report, Wells and BoA (through acquisitions of failing franchises) are two of the largest holders of POAs. In total, AG Brown sent a letter to 10 residential servicers including JPMorgan Chase, Litton Loan Servicing (a unit of Goldman Sachs), Residential Capital Corp., Ocwen Financial Corporation, OneWest Bank (formerly IndyMac), American Home Mortgage Servicing, Saxon Mortgage (a unit of J.P. Morgan), and Select Portfolio Servicing. The companies need to respond to the AG's office by November 23. Mr. Brown called POAs "ticking time bombs that the lending industry has the power to defuse," adding that "Unless these banks and loan servicers act quickly, hundreds of thousands of mortgages will reset across the state, creating a new wave of foreclosures." According to NMN/QDR, there at least $500 billion in outstanding POAs in the U.S.