Senator Introduces Loan Mod Bill

Prior to initiating any foreclosure actions, lenders and servicers would have to evaluate the borrower for a loan modification and provide relief for qualified homeowners, according to a bill introduced by Sen. Jack Reed, D-R.I. The bill (S. 1731) indicates that a borrower should be offered a modification plan if the net present value of the modification is greater than foreclosure. "My bill provides targeted relief to qualified homeowners so that more families can keep their homes," Sen. Reed said. The bill is aimed at stopping servicers from pursuing foreclosure actions while borrowers are being considered for modifications or in a trial period. S. 1731 "establishes meaningful penalties by making noncompliance a defense to foreclosure," a summary of the bill says. It also places limits on foreclosure fees and prohibit costly mark-ups of fees. Democrat Sens. Dick Durbin (Ill.), Sheldon Whitehouse (R.I.) and Jeff Merkley (Ore.) are co-sponsors of the "Expand and Improve Loan Modification Programs" bill.