Attorney General wants banks to detail plans to stem foreclosures
October 29, 2009 12:21pm
• Says a new wave of foreclosures is building
Concerned about a "new wave" of foreclosures, California Attorney General Edmund Brown Jr. on Thursday called on ten major banks and loan servicers to detail their plans to assist homeowners facing dramatic monthly payment increases on “pay option adjustable rate mortgages.”
• ‘Ticking time bombs that the lending industry has the power to defuse’
"Homeowners with pay option ARMs are sitting on ticking time bombs that the lending industry has the power to defuse," says Mr. Brown. "Unless these banks and loan servicers act quickly, hundreds of thousands of mortgages will reset across the state, creating a new wave of foreclosures." ?
While the economy is beginning to improve, homeowners desperate to save their homes have seen little relief, Mr. Brown says.
In the third quarter of 2009, California accounted for more than 25 percent of the nation's foreclosure activity, with 250,000 homes receiving foreclosure filings statewide. Four of the nation’s highest foreclosure rates were in the Central Valley – Merced, Bakersfield, Modesto and Stockton – according to RealtyTrac Inc., an Irvine-based mortgage information company.
California homeowners hold almost 60 percent of the nation's exotic pay option ARMs originated between 2004 and 2008. Approximately one million of these mortgages will reset nationwide in the next four years, resulting in higher payments and a dramatic increase in foreclosures, Mr. Brown says.
The attorney general’s request was made in a letter sent to: Bank of America Home Loans & Insurance; Wells Fargo & Company; JP Morgan Chase & Co.; Litton Loan Servicing; ResCap LLC; Ocwen Financial Corporation; OneWest Bank; American Home Mortgage Servicing; Saxon Mortgage Services, Inc.; and Select Portfolio Servicing.
The banks and loan servicers are asked to respond by Nov. 23. http://www.centralvalleybusinesstimes.com/stories/001/?ID=13468