There is an interesting article published in today’s NY Times about probable changes in the bank’s foreclosure and loan modification process.
According to NY Times, the following proposals are on the table. This proposal is advanced by state attorneys generals who had presented these proposals to the nation’s biggest five banks with these demands. The net result would be that government would have sweeping authority over the mortgage modification process.
What are the proposed changes?
1. Banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.
2. Any borrower who successfully made three payments in a trial modification would be given a permanent modification.
3. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.
According to NY Times, this blueprint is still just a draft, and weeks, if not months, of tough negotiations with the banks remain. Several big banks, including Citigroup, Bank of America and JPMorgan Chase, declined to comment.
The government’s current program to help troubled home borrowers, known as HAMP, continues to face fierce criticism. Both