Crying Foul On Foreclosure Process

A cry had gone out that mortgage companies violated state laws in how they processed foreclosures. Now, State attorneys general have increased pressure on banks to address the concern.

Federal regulators are attempting to revamp a system that some are calling dysfunctional. The goal is to decrease foreclosures with regulations on the way mortgage companies handle homeowners that are having trouble making payments.

In discussion is whether servicers will be forced to pay large financial penalties. For example, banks could be required to write down twenty billion dollars of loan balances for borrowers whose homes are worth less than they owe.

Federal regulators and state attorneys general provided a settlement proposal to the country's five largest banks. The proposal calls for an overhauling of the banks' mortgage-servicing policies.

This proposal would make the request for loan-assistance a much easier process for the consumer. It's designed to clear away the bureaucratic fuzz in the way the banking industry normally handles a case.

Everything involved in the foreclosure process is covered in the proposal. From fees that borrowers may be charged to the way servicers should determine homeowners' eligibility for mortgage modification; these are detailed in the proposal.

Mortgage Modification is a particularly important area as it's the process that would ease term loans to help avoid foreclosure. These Mortgage Modification's have seen a lot of criticism because of the process that it takes to actually get approved by these banks.

Banks and other lenders often complicate things for a homeowner by going forward with foreclosure and mortgage modification simultaneously. The proposal would keep lenders from proceeding with foreclosure until after a homeowner has been formally denied a loan modification in writing.

Lawyers and industry insiders charged the proposal as nothing more than an attempt by the government to micromanage the industry. Consumer advocates on the other hand, see the reforms as long overdue. Regulators are simply hoping to bring about a resolution that will ultimately benefit both sides. The program has been quite a disappointment for the government and for the individuals who were counting on the help from the program. There have been some that were helped by the program but not as many as there should have been.

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Article Originally Published On: http://www.articlesnatch.com

Tags: Foreclosure process , mortgage companies , financial penalties

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