foreclosure help

Concerted efforts designed to prevent unnecessary foreclosures have reduced the amount of mortgage redefaults, says a group of state attorneys general and banking regulators. But the group also expressed concern that foreclosures continue to outnumber loan modifications.



According to a report issued by the State Foreclosure Prevention Working Group, a multi-state coalition, recent loan modifications are in fact performing better. Loan modifications may include reduced interest rates and other changes that result in smaller payments -- and in some cases, lower outstanding balances.



"Some analysts have predicted redefault rates as high as 75%, but today's report paints a brighter picture of the future," Washington Attorney General and working group member Rob McKenna said in a statement. "The newer modifications are holding up better, with fewer borrowers redefaulting."



Despite the progress noted in the report, McKenna says he's concerned that 6 out of 10 seriously-delinquent borrowers are not getting any help.



The report tracks loan modifications made by nine mortgage companies who were servicing 4.6 million loans as of March 2010. Banks -- which are regulated by federal agencies -- are not included in the report. Compared to loans modified in 2008, borrowers whose loans were modified in 2009 were 40% to 50% less likely to be seriously delinquent 6 months later.



The majority of loan modifications (89%) tracked by the working group for the first quarter of 2010 showed some reduction in payments, and nearly 78% lowered the monthly payment by more than 10%. Redefault rates were lower for loan modifications that reduced the principal balance by more than 10%.



However, only 1 in 5 modifications reduce the loan amount, and the vast majority increase the loan balance by adding servicing charges and late payments.



"When housing prices are low, the lender is going to take a loss if that home is foreclosed and surrounding home values will ultimately be impacted," McKenna said in a statement. "The underlying theory of a loan modification is to enable the lender to get the same value out of the home as if it had been foreclosed. The lender still takes a loss through the reduction of interest or principle. But the net result is better for the community and the borrower because, of course, a house is more than just an asset. It's a home."



The Office of Thrift Supervision and the Office of the Comptroller of Currency reported a similar reduction in redefault rates in its Mortgage Metrics Report for the first quarter of 2010. Of the 590,000 modifications made in 2009, nearly 52% were still current (i.e. homeowners were making payments on time) at the end of the first quarter of 2010, the agencies reported. By comparison, only 27% of loan modifications made during 2008 were still current.



McKenna and his office have trying to help homeowners by cracking down on unethical lenders and fraudsters, pushing for the modification of unaffordable mortgages, urging changes to bankruptcy rules, and seeking state-federal collaboration on bank regulation.



The Washington Attorney General's Office also granted $920,000 of its Countrywide/Bank of America settlement payment for local foreclosure prevention programs that provide counseling and pro bono legal services.



The State Foreclosure Prevention Working Group consists of 12 state attorneys general (Arizona, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Nevada, North Carolina, Ohio, Texas and Washington), bank regulators for New York, North Carolina, and Maryland, and the Conference of State Bank Supervisors. The group was founded in 2007 and has issued four previous reports.

There's a lot of despair in these parts lately and it's perfectly understandable. The country is going to hell in a handbasket and the forces of corporatism and know-nothingism are dominating the political culture while the Democrats seem to be in a state of suspended animation. It's very tempting to just tune it all out and watch TV. But we can't. Not as long as there are progressive politicians like David Segal out there on the campaign trail fighting to change things every day. If don't support real progressive leaders with a track record of success, we are basically giving up.

David is running in a primary for the Democratic nomination for Patrick Kennedy's seat against two doctrinaire establishment hacks and an anti-choice zealot and he needs our help in the home stretch. (The election is September 14th.) His most formidable rival, the mayor of Providence is using his money advantage to run a deceptive ad and David needs our help to run this rebuttal to remind people who the real progressive in the race is:

I know it's hard to get excited about politics right now. But it would be foolish for us to fail to support a young, smart progressive with a proven track record in his run for congress. Unless we are prepared to simply surrender to the forces gathering around us we need to nurture future progressive leaders who understand this political environment and have ideas about how to prevail in it. David is one of those future leaders.

Here's what Howie wrote about him when Blue America endorsed him:

David Segal is one of us. He was elected to the Providence City Council in 2002 as a Green, and is now a lefty Democratic state Rep for Providence and East Providence. He has a very clear path to victory and he can win-- and if he does, he'll be among the strongest voices for progressives in the halls of the Capitol.

David's worked on the meat-and-potato issues: Jobs, the environment, housing, progressive taxes, all with success. He's successfully pushed for expanded renewable energy, more affordable housing, against predatory lending, and for foreclosure prevention measures.

But he's never shied away from the really controversial issues: He's been a vocal leader on criminal justice reform, standing up for the rights of immigrants and for gay rights, and has pushed as hard as one can from the state level against war spending. He's an ardent supporter of gay marriage, and was the sponsor of the last year's bill, which was passed over the Governor's veto, to allow gay partners to plan each other's funerals.

He's a co-sponsor of marijuana decriminalization, and just convinced the Governor-- after two years of vetoes-- to allow a bill to become law that ensures due process for people on probation.

He's sponsored the "Bring the Guard Home" legislation, and his first act on the City Council was to pass a resolution against the war in Iraq.

But, most importantly, he's an organizer at heart, who is committed to joining the Progressive Caucus-- and making it function better. Here's an excerpt from an interview with David:

"n Rhode Island I've tried to develop alternative structures for legislators to lean on when the leadership makes such threats. I am the lead organizer for our progressive caucus. I founded a political action committee to support members of our progressive caucus so that if funding from sources dries up at leadership's request because something was done to offend them, that we would have at least some, some degree of money to fall back on to help fund our campaigns nonetheless. We funded ten, twelve races relatively modestly in the last cycle and hopefully we'll be able to do something in the forthcoming cycle."

That's the kind of inside political organizing we desperately need in the US Congress. If you can help with a few dollars today the campaign can keep its ads on the air and compete. If he wins the primary, there's almost no doubt that he will win the seat. It could be one of the few progressive victories in this midterm election.

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