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Hope Now: 8 Percent of Borrowers Helped
Gov't-Organized Group Says Nearly 8 Percent of Subprime
Borrowers in Second Half of 2007
By
Alan Zibel, AP Business Writer
WASHINGTON
(AP) -- A Bush administration-organized
effort to rescue troubled homeowners says it
helped nearly 8 percent of subprime
borrowers in the second half of 2007 -- more
than its original estimate.
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The group of lenders, investors and
nonprofit groups, dubbed Hope Now, was
created by the Bush administration in
October in response to soaring mortgage
defaults and home foreclosures that have
caused multibillion dollar losses on Wall
Street and sent stock markets plummeting.
The Hope Now group said Wednesday it helped
545,000 subprime borrowers with shaky credit
in the second half of last year, compared
with its January estimate of 370,000. That
works out to 7.7 percent of 7.1 million
subprime loans outstanding in September
2007.
The mortgage industry is "working hard to
help more and more homeowners who are in
difficulty, but we know there is much more
to be done," Faith Schwartz, the coalition's
executive director, said in a statement. The
group attributed the increase to having 14
loan-servicing companies on board, up from
nine in the earlier study.
Among the subprime borrowers aided, 150,000
were helped through permanent-loan
modifications, such as lower interest rates,
while 395,000 negotiated repayment plans,
which often involve a borrower getting back
on track even though a few payments were
missed.
Members of Hope Now include Bank of America
Corp., Citigroup Inc., Washington Mutual
Inc. and Wells Fargo & Co.
Consumer groups, however, point out that
many borrowers still can't keep up, even
after loan workouts. They say many of the
borrowers in the Hope Now effort have
negotiated short-term loan modifications or
repayment plans, which often involve a
borrower getting back on track after missing
a few payments. A full-fledged refinancing
at a lower rate is preferable, they say.
Jim Carr, chief operating officer of the
National Community Reinvestment Coalition,
said a federally funded effort to refinance
loans is needed. "Private, voluntary actions
won't fix the problem," the consumer group
leader said.
Carr cited a January report from the
Mortgage Bankers Association which showed
that among subprime adjustable loans that
went into foreclosure in the third quarter,
40 percent came from borrowers unable to
keep up with modified loans or repayment
plans.
Foreclosure prevention has become a top
priority in Washington, as nearly 2 million
mortgages made to borrowers with poor credit
are scheduled to reset to higher rates this
year and next.
Conclusion
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of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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