Trying To Fast-Track Mortgage Fixes
ARI SHAPIRO, host:
And as home foreclosures mount, officials are looking for ways to prevent a flood of additional bank repossessions. It's critical to fixing the economy. At a hearing yesterday, lawmakers tried to figure out how to speed up the reworking of troubled mortgages. NPR's Yuki Noguchi has more.
YUKI NOGUCHI: Restructuring a mortgage has a lot of possible sticking points. Just getting the borrower to open their mail is a challenge. Another is getting multiple lenders to agree on the size of the haircut they'll take to save a property from going into a costly foreclosure. And then there's the servicer. The servicer is a middleman, often a bank or a company like Fannie Mae. The servicer gets paid to represent lenders by collecting money every month. But it doesn't actually own the loan. So here's the problem. Who's got final say in pushing mortgage workouts through the system? Democrat Barney Frank chairs the House Financial Services Committee.
Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, House Financial Services Committee): Someone has got to have the authority to make a decision. And we face a situation now in which that isn't the case.
NOGUCHI: Thomas Deutsch is Deputy Executive Director for the American Securitization Forum which represents banks and investors. He says servicers are in a bind.
Mr. THOMAS DEUTSCH (Deputy Executive Director, American Securitization Forum): Servicers have indicated that they believe and are very concerned that if they do over-modifications of mortgage loans that they would be subject to a lawsuit. Those same servicers should also be scared if they are subject to lawsuit for under-modification.
NOGUCHI: And now lawmakers must grapple with the question of how to make the process simpler, faster, and least harmful to everyone involved. Yuki Noguchi, NPR News, Washington.