California Loans News

The chairwoman of the Subcommittee on Housing and Community Opportunity calls on real estate players to bring out lawsuits against high paying loans so more homeowners could save their properties. Chairwoman Maxine Waters, D-35th California, said, “We need aggressive action to force lenders to modify the predatory loans that they made. State attorneys general and civil rights groups are taking the lead in preventing foreclosures by filing lawsuits against the originators of these predatory loans, and I commend for their action.”

In 2008, the Congress passed the Housing and Economic Recovery Act. This created Hope for Homeowners, which is a mortgage principal reduction program. The Act also helped organizing the Neighborhood Stabilization Program that addresses abandoned properties and those that have gone through foreclosure. This year, the Congress passed another law that included measures in facilitating more accommodations of loan modifications. This is the Helping Families Save Their Homes Act. In March this year also, the Obama administration established the Making Home Affordable program. This one gives monetary incentives for mortgage servicers that participate in the loan modification work.

“Despite all our efforts in Congress, foreclosure rates are still increasing and show no signs of slowing down. Struggling homeowners need permanent loan modifications to prevent foreclosure. While the Making Home Affordable program has produced 500,000 trial modifications, very few permanent modifications have been provided,” Waters further explained.

Mortgage servicers participating in the program have been reported to perform slowly in modifying eligible loans in their loan portfolios. The Treasury Department revealed recent data that Bank of America (BoFa), Well Fargo and JP Morgan Chase modified a small percentage of their respective eligible loans. BoFA modified only 11 percent, Wells Fargo and JP Morgan Chase modified only 20 percent and 27 percent respectively.

According to online foreclosure tracking service Realty Trac, filings for foreclosures already reached a record high during the third quarter this year. It was equivalent to more than 937,000 during the said period.

In light of the lawsuits Waters was claiming, the impact of litigation may aid the homeowners keeping ownership of their properties through filed suits and resolved settlements. Attorney general of California Jerry Brown was reported to leading this measure underway. He managed $8.7 billion settlement with Countrywide last 2008. Waters said, “Countrywide was the leading architect of the subprime bubble. Attorney general Brown successfully argued that loan originators are responsible for these predatory loans and that they must be held accountable for their actions.”

In other locations, the move has also been proven effective. Massachusetts attorney general Martha Coakley achieved a settlement with Fremont Investment and Loan and Fremont General Corporation, the former’s parent company. The settlement amounted to $10 million, which would provide funding to foreclosure problems and troubled borrowers in the said state. The City of Baltimore, Maryland is suing Wells Fargo for “targeting subprime loans to African-American individuals, families and communities.” And the City of Cleveland, Ohio is suing 21 lending agencies for making predatory loans.

The National Association for the Advancement of Colored People (NAACP) has also filed a lawsuit against major lenders like Wells Fargo, Chase, Citi Mortgage, GMAC Mortgage, HSBC, SunTrust Mortgage and others.

Waters said, “I urge the state attorneys general to band together – much as they did when they sued the tobacco companies – and bring a national class action lawsuit against lenders and mortgage servicers.” Waters has also brought up another legislation that requires mortgage servicers to work early on with homeowners defaulting on their loans. She added, “Congress and the Administration have done a lot to address this crisis, but it’s not good enough, so I am continuing to search for ways to keep families in their homes. in the meantime, we need more of these kinds of suits because that is what lenders will respond to.”

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